Wal-Mart moving to China. What will be the implication for IHRM for this move and suggestions
Wal-Mart Moving to China
More and more companies worldwide are seeing that merging with or acquiring others is a major way of surviving and becoming more globally competitive (2002). With the entry of US-based Wal-Mart Supercenter into China, Wal-Mart expanded its presence in China and has become the world’s largest private employer and retailer. Around the world, Wal-Mart employs more than 1.6 million associates with its operations to more than 5,000 units in all of its branches from the United States, Mexico-Puerto Rico, Canada, Argentina, Brazil, China, South Korea, Germany and the United Kingdom. The entry of Wal-Mart to China in 1996 has resulted into Wal-Mart’s recognition as the top commercial and trade companies and the only retailer included in the list. Recently, in China alone, Wal-Mart operates in 47 units (42 supercenters, 3 Sam’s Clubs, and 2 Neighboring Markets) within 22 cities all around China. Moreover, Wal-Mart also employs more than 25,000 associates in China. Within these numbers, it would be interesting to know and evaluate how Wal-Mart manages its International Human Resource with its cooperation with China. It is undeniably true that Wal-Mart creates a good impact with its investment to China providing good job opportunities in the support of the local manufacturing industry and the advancement of local economic development. It has been one way of contributing to China’s local economy in Wal-Mart’s offer of creating more employment opportunities and generating more taxes.
Being evidently successful in its venture with China, Wal-Mart’s strategy can be weighed up and assessed and thus recommendations and implications will then be formulated. This is the aim and main purpose of this paper.
- Organizational Contact/Control
Upon entry of Wal-Mart into China, a joint venture is expected to go in between the two parties integrating them into one union set up for common goals. It has been suggested that Multinational Enterprises like the Wal-Mart should secure dominant control of the joint venture’s management when engaging in joint venture with local emerging market partners (1984; 1997;1997; 2001). Even though these scholars argue that it would best for one of the partners to dominate and control the joint venture, it is still highly advised that Multinational Enterprises share their control and advantage with local emerging market partners as much as possible (1985, 1993;1994, 1996).
The organization’s control over the Human Resource Management should be centered and put their focus on the cultural differences. A weak control over this department could lead to interference with the ability of the management to quickly obtain the economic benefits they used to anticipate. Naturally, it would take years for management to concentrate on a common vision in coming up with a single unifying culture. This is much of a challenge faced by the Wal-Mart with its entry to China market.
It will be the central issue that Wal-Mart is facing whether their human resource (HR) practices should be customized to meet the needs of local people or whether they must be standardized across different national units. It will also be useful to argue that the company should follow different Human Resource strategies in each of the different cultural environments in which they operate.
There should also be an assessment of HR systems adopted by both parties in order to come up with the better one. In such a case, the career-development, performance evaluation, and incentive systems should be implemented in a decided system. The transfer of an HR practice is very critical for Wal-Mart whether they choose not to follow a local adaptation strategy. Cultural differences have the tendency to limit the transferability of a particular HR practice and thus a Management by Objectives is considered to be the best management practice in counteracting such difficulties.
Moreover, most multinational firms utilize the so-called employee suggestion scheme as one of a set of best practices ( 1995; 1996). This practice consists of training and encouraging employees to submit ideas on how to improve production processes for the purpose of achieving higher quality levels and reducing production costs. As a final point, the issue of transferability of HR practices has to be analyzed practice by practice and country by country ( 1999).
- International Training
Firms that operate in the global arena confront a number of special problems related to the training and development of their global workforces and managers. Responsibility for training and development is traditionally one of HR's core functions. The training and management development function takes on a new and more complex nature in many ways ( 2004): (1) when an enterprise’ international business reaches a significant level, (2) when it is involved with multiple subsidiaries and partnerships in other countries, (3) with the transfer of its technology to other countries, (4) with developing and pursuing a global strategy, and (5) with the assignment of a number of employees to international positions.
Here are some implications to the discussion of training and management development for the success of multinational firm:
- Think and act globally
This suggests a global enterprise, like the Wal-Mart to think about and prepare for a presence in all the critical markets in the world not only its home region.
- Become an equidistant global learning organization
This implies global enterprise facilitation of learning from all cultures, at anytime and in any manner possible. The primary rule of equidistance is to see and to think global first even though it may seem unusual and uncomfortable.
- Focus on the global system
The development programs should be focused on breaking down the silos of departments and even the boundaries between countries and those that separate customers and suppliers and focus on the big picture global organizational system ( 2004).
- Develop global leadership skills
This kind of leadership is different from the domestic marketplace. In other words, global leadership requires competencies much more different from the domestic one and thus should be the focus of global training and development programs of Wal-Mart upon entry to China.
- Empower teams to create a global future
Multinational and cross-border teams should be increasingly used and empowered to perform critical organizational projects and problem-solving activities. In addition, multinational teams can, themselves, be a major tool in the development of cross-cultural competencies.
- Make learning a core competence for the global organization
The global organization needs to become a global learning organization where learning and development introduces all that organization does.
- Regularly reinvent employees and the global organization
Constant self-development must become the foundation of strategies for success for both individuals and organizations in today’s highly competitive global economy.
- Host Country Considerations (industrial relations)
This consideration is also very important in managing the international human resource. It is in this part that involves trade unions (if there are) or other form of workforce representation and its consequences on policy, practice, and performance that greatly affects IHRM. According to a study of (1996), 66% of managers in establishments where unions were recognized considered the unions to be helpful. Furthermore, the study has found that union creates compatibility with human resource management.
- Managing Performance
Managing performance is a key factor in determining organizational success. The accomplishment of an organization greatly depends on an effective management team. The competency of Performance Management necessitates significant proficiency on the part of HR leaders. It will be a challenge for HR nowadays in functioning in strategic and tactical partnership with senior management to help the organization achieve its mission and vision.
Here are some guidelines for HR professionals formulated by (2000) that can provide implications for Wal-Mart in its entry to China.
Ø Aligning with the Chief Executive Officer
Ø Take responsibility for the entire organization’s success
Ø Focus on production efficiency regarding the administrative HR functions
Ø Become outstanding at results orientation and managing performance
Ø Begin by identifying purpose, objectives, and needs
Ø Focus on process
Ø Solicit feedback on how you are perceived (employee surveys)
Ø Develop yourself (models of developing human employees)
Each of the above sub-headings is accompanied with recommendations and implications relevant and is of great importance to Wal-Mart in its entry to China Market. The combination of these recommendations as business proposals is such a perfect model of doing business overseas, more so is the proper implementation and execution of it.
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