International HR Management Case Study

Introduction

Human resources are very important components of any corporate organization as explained by Dawson (2003, p. 147). To ensure better performance of human resources, it has been a tradition of different corporate organizations and business entities to have human resource departments headed by human resource managers. The functions of human resource managers include all issues that pertain to the welfare of the personnel working in the company; these also include the recruitment of new human resources into the corporate organization.

With globalization in process, many business entities and corporate organizations have gone internationals; in this case, so many businesses have expanded, and continue to expand, their operations to other parts of the world (Khosrowpour, 1996). This has necessitated the need to have international human resources managers. The international human resources managers perform the responsibilities of handling human resources matters that are related to the foreign operations of corporate organizations or business entities. The process of international human resource management is a key to the international expansion of a company and involves preparing staff members to work discharge their duties in various foreign operations. The process of international human resources management also entails interpreting or translating international customs and culture with regard to conducting international business activities.

In operating internationally, it is important for the international human resources managers to be knowledgeable of international business communications; this implies that for a company to think of operating internationally, it is important that it puts in place all the strategies that will enable it to operate and interact effectively and efficiently with other international business community; these may include being familiar with expatriate programs, international laws and benefits accruing to international workers. Most importantly, corporate organizations should have sufficient financial resources in order to strengthen the operations of their international human resources management process.

The Peanut Company of Australia (PCA)

The Peanut Company of Australia is one of the leading companies that provide peanut products in the entire Australian nation. The company was formed in 1924 and with a mission to develop peanut products and supply them to consumers in Australia. Besides the production of peanut products, the company is also engaged in the development of new seeds, doing research in order to come up with high-quality peanut seeds for planting. Moreover, the company provides farmers of peanuts with several relevant pieces of advice; the pieces of advice are based on harvesting, removal of shells, grading of the seeds, roasting and finally the addition of value to the products (Bryceson 2006).

The Peanut Company of Australia operates within the food industry. Furthermore, with globalization, the company has expanded its operations to various international markets. It has growing export sales in the United States of America, Japan and the United Kingdom amongst others. Currently, the company plans to expand its operations to Indonesia where it is expected to capture new marketing opportunities. The management structure of the company includes six members of the board of directors and the management which is instituted by directors of sales and supply, sales and marketing and the chief financial officer and secretary to the company (Bryceson 2006).

The human resources of the Peanut Company of Australia are widespread. The importance of human resources is evident in the harvesting stage where groundnuts are pulled using machines but with human interventions. Other areas in which human resources are vital to include planting, roasting, grading, value addition and or the supply of the finished products to both local and international markets.

PEST Analysis

Indonesia is one of the growing international markets for various products, especially peanut products. In Indonesia, peanut oil is the main product used mostly in cooking; the peanut oil is extracted from peanuts. Coupled with other uses of peanut products, Indonesia, therefore, provides a better opportunity for Peanut Company of Australia to expand its already established international operations (Henry 2008).

Political

The tax policy in Indonesia is favorable for the company to profitably operate in Indonesia. Lin fact, the tax policies in Indonesia are more favorable for international business than in Australia. Moreover, looking at employment laws in Indonesia, it is easy and possible to get expert employees from home country and abroad; this implies that there are no restrictions on the nationality of employees allowed to work in the country. Moreover, the company’s products do not have serious environmental implications and the environmental policies of the company are already compliant with the environmental laws of the Indonesian government. Besides, the environmental laws of the country are easy to comply with.

There is sufficient political stability in Indonesia and this provides a favorable environment for international investments in the country. This owes to the fact the country depends substantially on foreign direct investment; hence the political elites are forced to ensure that a favorable environment exists for foreign investors to conduct their business within the country.

Most importantly, the Indonesian government has ensured that the tariffs and all forms of trade restrictions do not scare away foreign investors. Compared to the Australian nation, the trade restrictions and tariffs in Indonesia are low and the establishment of business does not need t to follow a tight bureaucracy; in other words, the business activities in Indonesia are more liberalized than in Australia and other nations of the world.

Economic

Economic factors are very important for the Peanut Company of Australia to consider investing in Indonesia. Indonesia is a rapidly growing economy and the government has encouraged the establishment of business entities that will enhance the nation’s economic growth. The Indonesian government has provided several economic incentives that make the country attractive to foreign investors. The interest rates charged in Indonesia are bearable as compared to other world markets; the rates are relatively low and affordable to most foreign business operations.

The exchange rates of the Indonesian currency against major world currencies are also incentives that make it profitable to invest in the country. Besides, it is important to note that Indonesia has not experienced serious inflation in the past several years. The currency value has been stable for some time and therefore, it is not dangerous for the company to go and invest in Indonesia.

Social factors

For the smooth and profitable operation of the company, social factors will be one of the great determinants. The social factors include those factors that influence the needs of the customers and the size of the potential market opportunities. The implication of social factors is linked to both demographic and cultural issues.

One of the most important social factors is health consciousness. The potential consumers of the company’s peanut products in Indonesia are well enlightened about health issues and would only want to consume what promotes their healthy living. In this case, it government has put down some policies that must be followed by the entities operating in the food industry. Peanut Company of Australia has safety policies that are concerned with ensuring that the consumers of its products get products free of any form of health risk.

The population growth rate in Indonesia, though not high, gives hope for an expanded market. This is reinforced by the fact that peanut oil is used on large scale by Indonesians for cooking purposes. It, therefore, implies that the growing population is likely to lead to an increased usage of peanut oil; this subsequently opens up more market opportunities for peanut products. Moreover, peanut products can be used by individuals in all age groups. This makes it easy for the company to focus on the market as a whole instead of spending resources on market segmentation.

Safety of the citizens is one of the major concerns of the Indonesian government; in this case, it will be easy for Peanut Company of Australia to comply with the food safety policies that the government of Indonesia has put in place; this is because the company has food safety policies that meet international standards and requirements. Generally, the government of Indonesia has the obligation to safeguard Indonesian citizens against harmful consumables.

Technology

Technology is one of the most important components of globalization. International business corporations utilize technological know-how in conducting foreign operations. The government of Indonesia has provided a proper environment in which business entities, both local and foreign, can embrace the use of modern technologies to enhance the production of goods and services. There are policies supporting research and development which is very instrumental in terms of innovation and new invention during the production process.

The rate of technological change in Indonesia is high; this implies that new technologies come into the market fast and business operators adopt them almost immediately. This promotes high-quality production. It is also important to note that the government of Indonesia has a plan of providing technology incentives to business corporations thereby making it profitable to pursue technological innovations through research and implementations of new technological recommendations. One of the most important parts of the production process is transport. The Indonesian transport system is well developed and is good for efficient production and distribution of goods and services. This will be of great benefit to Peanut Company of Australia.

Notably, there has been some cultural strain between Australia and Indonesia in the past few years. This stemmed from the fact that both nations have different national cultures and Identity. It is important to point that both countries are culturally different based on individualism against collectivism besides power distance; this is according to research done by Hoftede. This scenario has, in many cases, caused some misunderstandings between citizens from both countries who are interacting together either through business or learning. Premised on the research done by Hoftede, the culture of Indonesia is characterized by low avoidance of uncertainty, high power distance, masculinity and collectivism. In the meantime, the Australian culture can be described as low power distance, high level of individualism, low avoidance of uncertainty and masculinity.

The insinuation of this is that the Indonesian people are more likely to avoid conflict due to their belief in collectivism; this is contrary to the individualistic culture of the Australian people who are logically engaged in speaking their personal mind and would rather do so than face-save in the presence of the third party. In short, according to the Australian culture, it is all right to be dissimilar with someone by use of logical argument and one does not have to oppose with the uncomfortable position in case he or she does not like what something or an issue. Nevertheless, the Indonesian culture is different, it is considered ethical to refer to people by their formal reference titles like “sir” and “madam”. This cultural explanation is supported by the ideas of Hoftede (Jacko 2009).

The implication of this to human resource management is that the process is likely to encounter some difficulties since some of the employees of Peanut Company of Australia will be moved to work in Indonesia. In this case, it is highly likely that there will be a cultural conflict between the employees of Indonesian origin and those of Australian origin. This situation is explained by Hofstede’s cultural dimensions (Borgos, 2008). This will result in complex human resource management strategies, which will ensure both cultures are reconciled for the beneficial and profitable operation of the company. For this matter, the human resource management process will be forced to come up with techniques of training the employees on the need to understand one another based on national cultural origin. In addition to this, the process will also have to include making employees understand the foreign cultural practices and how they inform individual behavior and relationship with others.

It is therefore important that international corporations like Peanut Company of Australia have sufficient knowledge on the diversified international cultures and how to manage employees recruited from the international labor market; this may even require the engagement of international human resource management consultants. Consequently, the company will have to spend more on its international resource management. Overall, human resource management will have to increase its operational cost to cater to the culturally heterogeneous staff members. But, it is important to note that the problem of the cross-cultural difference between the two nations will not be such a big deal for the company’s human resource management department since both countries have been trading partners, which there is a way of conducting business without necessarily disagreeing on the basis of culture. However, this remains a sensitive issue.

Recruitment and Selection

In many cases, the process of recruitment and selection has been informed by national culture, ethical and legal structures. This is exemplified in the case study of recruitment in Canada (Catano 2009). Based on national culture, in many instances, the process has been subject to issues of favoritism, racism and corruption. It is notable that many international companies would wish to recruit and select whoever they feel suitable to join their teams; in this case, they prefer to get employees from the parent countries to work in their expanded foreign business operations. Most recruitment agents or rather, human resource managers do have personal biases based on race, culture and favoritism. The dominant factor here is the diversified cultural practices and beliefs that the human resource managers may fear will interfere with the smooth running of the company’s core businesses. Moreover, recruitment and selection based on culture may be an issue due to the fact that there may be a general feeling that recruiting from a preferred national culture will make operations within the company smooth, effective and efficient; this is reinforced by the absence of cultural conflicts amongst the employees. In this case, many countries and international corporate organizations have come with certain policies that inform recruitment and selection, especially from the international labor market.

The legal basis of recruitment and selection is diverse across varied nations. In many cases, businesses planning to expand their foreign operations are faced with many legal issues when it comes to recruiting and selecting new employees. It is important to understand that recruitment or labor laws vary from state to state with some being stricter than others. The companies and other business entities planning to expand to foreign nations must be ready to face legal hurdles that may hamper their profitable operations. For instance, the minimum wage requirements in one nation may be different from the other of the parent country. This may make human resource recruiters consider moving to countries where they will recruit at lower legally approved wages. Besides, it is good to mention that international human resource management is regulated by international laws which inform the recruitment and selection process.

The recruitment and selection process also requires some ethics. In this case, ethics may mean undertaking recruitment independent of corruption, bribery, favoritism or racism; this implies that the process should follow certain laid down ethical principles which in most cases should meet international recruitment and selection standards.

Performance Management

The scope in which human resource management and the processes and practices within a country can be transmitted from one nation to another has been a challenging subject. This is mostly a challenge to international corporate organizations when they seek to establish human resource management procedures straddling varied cultures and nations. Performance management is one of the strategic human resource management processes that permit international corporations to perpetually assess and enhance individual employee performance with regard to the goals and objectives of the company. So, it is important to design performance management strategies that are appropriate in terms of national cultures. More specifically, multinational corporations, like the Peanut Company of Australia, to come up with performance management strategies that are appropriate and applicable to internationally diversified cultures. Besides, it is also important that the performance management strategies are within the ethical and legal requirements of the region of the company’s operation (Eckerson 2006).

Recommendations for Successful Expansion

The company should consider all aspects of expansion to foreign the foreign nation. In this case, it should consider the following recommendations in order to be successful:

1. It should make sure that tax policies and trade tariffs and barriers are either similar to the parent country or more favorable than those of the parent nation.
2. The company should make sure that is compliant with all legal requirements of the country in which it is expanding its operations;
3. The company should not only send employees from the parent country, but it should also ensure that it employs personnel from the host nation. This is because the personnel from the host nation understand the culture very well, which is important for the adaptation of the company in its initial operations;
4. The company should ensure it is able to offer new products to the host country’s market. moreover, it should offer new products instead of replicating what is already being produced by the host country; however, it can also focus on increasing the production capacity of the relevant industry in cases where local productions in the host country are inadequate;
5. It should also assess and make sure that the host country has the necessary updated technology for its operations; meanwhile, it should also ensure that it has the necessary skills and techniques that will enable it to compete favourably with similar companies already operating in the host country;

Conclusion

Corporate organizations and business entities planning to expand their operations to foreign nations are faced with several challenges when it comes to human resource management (Sparrow 2009). Such companies are forced to upgrade their human resource management process to meet international standards. Besides, companies planning to expand to foreign markets may need to enlist the services of international human resource management consultants.

Before undertaking the expansions, it is always important to carry out an evaluation of the host country using the appropriate tools like PEST analysis (Luo 1999). This will give a true picture of the intended host country hence leading to proper decisions with regards to business expansion to foreign nations. In addition, it is important to take into account the national culture of the intended host country; it is also prudent to look at the ethical and legal requirements for efficient and effective business operations in the intended host country. In expanding to international markets, it is important that multinational corporations should come up with recruitment and selection policies that meet international standards, besides, the performance management strategies should also be relevant to a multicultural environment; this owes to the fact that the corporations will be dealing with employees from different national cultures.

Reference List

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