HRMIC Assignment - ‘La Costbucks’ 2020. The costa Management

La Costbucks' 2020
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Abstract
China is growing at a fast rate in the 21st century following technology improvement and availability of labor. Many MNC's are, therefore, eyeing and trying their lack to expand their services to China. However, it is important for these corporations first to understand the critical considerations for IHRM subsidiary branch in China. In the underlying case, La Costbucks group established in Italy, aims to set up a subsidiary branch in China. Some of the key considerations in this paper include training the IHRM to be shaped to fit into Chinese services cape and ethics on pursuing CSR in China. The workable IHRM staffing strategy adopted for the company after expanding to China should be an ethnocentric strategy that focuses on placing PCN's on key positions. This is due to its effectiveness in pursuing home company interests. However, La Costbucks has been able to obey ILO, Human rights, and adhere to the Chinese government regulations to prosper in the new environmental setting. It is evident that PCN's and TCN's will face challenges related to cultural and language embargoes, but training is set to overcome them.
Key Word: La Costbucks, Italy, China, IHRM, PCNs, TCN's, HCN's
La Costbucks’ 2020
Introduction
China is growing at a fast rate in the 21st century following technology improvement and availability of labor. China has also invested heavily across the globe, which has resulted in mixed reactions among state governments and citizens of such nations. China is in the long head with the U.S. following its interference with the U.S. trade leading to the closure of giant companies such as Huawei. Also, China has led to developing infrastructure of many developing nations such as the Standard Gauge Railway in Kenya, among many more (China Embassy, 2016). Many multi-global corporates are therefore eyeing and trying their lack to expand their services to China. However, it is important for these corporations first to understand the key invent a suitable IHRM to work in China. This piece of work seeks to explore key HRM considerations with a critique on the benefits and limitations of Chinese CSR, differences of culture in Italy and China, the suitable IHRM staffing strategy difficulty PCNs (Expatriates) they may face in acclimatizing to China and ethical issues eminent for a European multicorporate expanding to China from the angle of ILO and human rights.
China's Gross Domestic Product has been ever increasing since 1991, with 77% real terms and annual GDP average increase registered as 12.1% over the last five years. This followed by the fact that China is a great global grain supplier, cement, coal, textiles, and power generation (China Embassy, 2016). Following this growth, China has emerged as a giant of investment grounds for foreign companies to move towards an "economy for all." Since its opening to multinational companies, a series of companies globally establishing operations in China mainland. Over the years, the country has attracted more than the U.S. $175 billion (China Embassy, 2016) from direct foreign investment.
However, the increasing presence of foreign investors and their myriad operations in China has sunk into management problems for MCN’s (Wilhelm & Xia, 1993).
Simultaneously, the link between people and business issues has profoundly impacted the H.R. functionality of these firms (Goodall & Warner, 1997; Warner, 1995; Zhu & Dowling, 1994). There seems to be a little research on how H.R. functionality has adapted in China following the new competitive thrust for China (Verburg, 1996). With the evolution of many multinational operations in China, new HRM models have been established in managing the taskforce (Ding, Fields, & Akhtar, 1997; Warner, 1995; Zhu & Dowling, 1994). Some of the most considered fueling factors on the PRC human capital include the change in culture and the “Iron Rice Bowl” based on HRM (Goodall & Warner, 1997; Von Glinow & Chung, 1989; Wilhelm & Xia, 1993). Firstly, the cultural upheaval caused detrimental impacts in China's academic sector, leading to derogated formal university education and eventually closure of universities and schools.
Tsang (1994) puts down the situation during those chaotic periods of 1966-1976, where intellectuals were looked down upon by those holding power. During the Regime of Mau Tsang, politics were more prestigious as compared to expertise for dealing with societal needs, as manifested by his famous saying "Red verses Expert" (Von Glinow & Teagarden, 1988). For over ten years, entrants to the task force were not interviewed based on expertise leading to a protracted human capital shortage. According to Tsang (1994: 12), persons who have attained the age of 45 and above have the best experience, but not English literate English. The reverse is true for people under 25 years of age who can speak good English, but with inadequate experience. Based on Tsang ideology, the group of people aged between 25-45 was put out of the taskforce from which managers should hail from as they lack skills and experience.
Intuitively, from Tsang’s (1994) ideology, the current bunch of skilled workers is under the age of 35, with the persons above age 35 having inadequate skills and adequate due to a long time of working under the rice bowl. The iron rice bowl characteristics were based on managing people in China before the reforms made by China (Goodall & Warner, 1997; Von Glinow & Chung, 1989). The rice bowl approach was close to the H.R. practices labeled by a long period of employment (Warner, 1993; 1995). Based on the approach, companies were supposed to take care of their internal clients with wages, medical, housing, job security, and social insurance (Verburg, 1996). There was lifetime employment, grave welfare coverage, no firing policies, rewards, and an age payment system (Goodall & Warner, 1997).
In that case, foreign companies entering the Chinese market face challenge of having low skilled workers, and low motivation to management and employees. Also, the fast growth of firms in PRC has resulted in protracted demand for a skilled taskforce that is motivated. Based on these two trends, firms entering the Chinese market have tremendous challenges, particularly in the Human Resources department.
Pros and Cons of Pursuing CSR in China
Corporate Social Responsibility (CSR) has become a dominant challenge among multinational corporations, particularly those that have expanded to China. In this sect, analyzation of several strategies for global corporations such as La Cost bucks that aim to expand to China shall be analyzed to deal with CSR's challenge in PRC. In the second phase, the ethics shall be analyzed, giving the pros and cons of pursuing CSR in China.
The Limitations of seeking Chinese CSR
There are myriad issues facing Chinese CSR that have become a hot nail in PRC emanating from the regulatory framework. Based on the issues, three categories are eminent comprising of Human rights, corruption, and environmental pollution.
Environmental Pollution
China does not have tight regulations regarding the dumping of toxic materials, emission of pollutants, and toxic substance usage at the servicescape in relation to those of developed states. Consequently, most multinational corporations tend to move their pollutant chains from their countries to China (Tian and Slocum, 2016). Pollution has become a severe problem in China with incidences of food pollution, water pollution, and usage of toxic materials being normal daily news. More importantly, China is known for its air pollution chain with dust forming in most parts of China. Chinese corporations have been connected to air pollution and other forms of environmental pollution, but similarly, multinational corporations also share a part in the pollution.
A report done by Greenpeace depicted that a total of 18 companies did not care about producing a report on the pollutants they were releasing to China’s water and air. In accordance with the Chinese pollution law that was initiated in 2008, requiring companies to portray their pollution to the public, this was converse. The companies in the list included Bridgestone, Nestle, Motorola, L.G., Samsung, Kraft, and LG. the report also indicated several companies as most miserable performing in environmental issues including the Apple, SingTel, Nokia, Ericsson and L.G. notably, Apple was ranked as the poorly worst multinational pollutant in China following 2013 allegations over its suppliers pumping toxic pollutants in river comprising of the Foxconn and UniMicron (Tian, and Slocum, 2016). Environmental pollution has become a daunting challenge in China, leading to some companies such as Coca-Cola providing pollution hazard pay to China's personnel as a financial subsidy for breathing polluted air in China.
In the case of LA Costbucks expanding to china, this will be a limitation since the company deals with food products. As noted, La Costbucks will operate the same way it was operating in Italy wit the same product line to retain their individuality and ethical selling point. As noted, European countries more so Italy has tight regulations on air and environmental pollution, making the place a haven for operating eatery points among other services industry. Chen, Zhang, and Ekroos (2007) note three main weaknesses in China's Environmental impact in a paper comparing E.U. and China's environmental impact. China's E.I. system has weaknesses in applying new models for EIA legislation, improvement of EIA guidance and education, and proper rules of engaging the public in the participation of EIA processes. The scholars conclude that for E.U. multinational companies to ferry well in China, these shortcomings need to be overcome.
Therefore, LA Costbucks will have to fight to tooth and nail to keep their products free from these pollutants since contaminating human food will make it unhealthy for consumption. In addition, they will have to pay more for the so-called "pollution Hazard pay" for their workers, which will see the company pay extra money due to the pollution in China. Therefore, pursuing Chinese CPR from the angle of environmental protection will seem to be an added financial taskforce for LA Costbucks.
Human Rights
Human rights cover a broad spectrum of issues within the servicescape. However, the substantial problematic issues lean on fundamental human rights, including freedom of association, speech, assembly, information access, and political repression. The second issue within the spectrum of human rights includes labor rights comprising the working-age, payment terms, working hours, and servicescape (Tian, and Slocum, 2016). Lastly, the rights of the poor in social services. However, human rights are different from environmental issues since it is easy to know the right and wrong usage of the environment. Still, human rights issues are controversial and present a dilemma in some situations, more so those aligned to deontological theories on right and wrong act. Human rights do not have universal accepted norms as well as standards and practices.
This will align to develop Google "to make the World's information universal, acceptable, and useful.” However, the mission was challenged in 2006 during the launching of its Chinese homepage. This was after Google abandoned its mission statement to acquire Chinese regulations. Human rights activists protested following this act by Google, after which Google moved from Mainland China to Hong Kong in 2010 (Tian, and Slocum, 2016). The main aim that led Google to chose to include Сhina's regulations was to induce search-engine operations in China.
This scenario presents a sharp conflict between the West and China on human rights perception. China has inferior labor rights compared to other developed countries (Tian, and Slocum, 2016). Multinational corporations like LA Costa bucks will hence be bestowed to improve labor rights while operating in China, among other Asian territories. Simultaneously LA Costbucks will have to engage practices that do not violate labor rights, such as increasing operational costs among other practices (Tian and Slocum, 2016). There have been cases prior, such as Foxconn, a Taiwan based corporation that employed more than one million workers in China, serving as a supplier for Apple.
The allegations on Foxconn were that the company kept its employees in a crowded condition that resembled military security forces security. Also, the employees worked long hours approximately 60 hours a week, which were not compensated. The management also interfered with workers' personal life leading to several workers committing suicide as they tried to jump out of the tight security working area. A report compiled in 2010 indicated a total of 18 employees who had suicidal emotions and attempted suicide (Tian, and Slocum, 2016). However, some multinational corporations like NIKE.com, Reebok, Brother group, and other multinational organizations have put more effort into improving services cape conditions in China.
In the case of LA Costbucks, it will be a good idea to put down regulations and policies on employment terms, workers' security, promotion policy, hiring policy, termination policy, and other issues about corporate social responsibility among the internal client. Also, most multinational corporates have neglected the issue of rights to the poor, so LA Costbucks should fill this gap by addressing the issue satisfactorily. In that case, the company should come up with a plan of giving back to the society, such as drilling water, setting up house facilities to the poor, sponsoring bright students who emanate from the underprivileged society, and training them on catering and hospitality services as a leading industry.
China is experiencing a widening economic disparity in the efforts of integrating with multinational corporations. This follows as many global corporations in China are established in places where the rich reside to tap the consumption of power of the privileged. It is important to note that although the poverty line in China is minimal, there are still underprivileged people, such as in the western province (Tian and Slocum, 2016). Therefore, La Costbucks should put the less privileged people into the heart and help them since the company has all the resources to provide employment and lighten their lives again.
Cultural Differences Between Italy and China and the Impact on HRM
Culture is viewed as a set of values, expectations, beliefs, and artifacts shared among members of a given society and influencing the behavior and attitudes (Hofstede, 2006). In that case, being aware of the meaning of society's values, expectations, artifacts, and beliefs makes one also aware of the expected behavior and the attitude of the members of that society. This can be translated to be true for the company and in this case the multinational corporations venturing into localities of varied cultures (Bilsky, Jehn, 2002)
Therefore, setting up operations in a foreign environment will mean that the company will be in contact with different variables resembling varied customs and habits, varied ways of thinking, and acting based on socio-cultural and organizational point of view (POV) (managerial POV). The corporation with the set of national and organizational cultural values shares a part to myriad counter-parties that do not have the same cultural vision. Therefore, a company might face challenges in acquiring expected performance (Cavusgil, 2008). Therefore, having a good knowledge of the cultural differences is necessary to predict the behavior of the internal client and external clients among other stakeholders' behaviors and their attitudes in any given foreign environment and achieve the expected results (Cartwright, and Cooper, 1993).
Cultural differences have a profound impact on companies' expectations and strategic and managerial issues (Park and Ungson, 1997). According to Lane and Beamish (1990), national cultures' influence based on behavior and management systems results in exponential conflicts. The variation between cultures results in different psychological setting for multinational corporations as well as their activities. Consequently, different management styles and practices are acquired, which may negatively influence the firm's p...