HRMIC Assignment - ‘La Costbucks’ 2020 Management Essay

HRMIC Assignment- La Costbucks’ 2020
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Abstract
The current era of globalization has influenced organizations to expand operations to the overseas markets as a way of enhancing growth and profitability. Human resource managers encounter dilemmas in the process of managing cultural variations between groups or countries. Therefore, top executives need to involve all the stakeholders in making ideal decisions regarding operations. Lo Costbucks, an Italian coffee bar chain dealing with quality coffee and French pastries, decided to venture into the Asian market through opening stores in Shanghai and Beijing. However, the management would have to invest in training based on the cultural variations between Italy and China. In such a case, the company would ensure that employees would address the needs of customers and meet the set goals. If the company utilized corporate social responsibility (CSR), it would be possible to have a good reputation in the market and increase overall sales and productivity. However, adhering to CSR policies can improve the total costs of operations or even make the customers impatient in waiting for certified products. The study’s core objective is to address the aspect of cultural variations between Italy and China and recommend the ideal human resource management approach.
KeyWords: Corporate Social Responsibility (CSR), company, coffee, Lo Costbucks, stores, market, and venture
HRMIC Assignment- La Costbucks’ 2020
Culture plays a significant role in international business, especially enhancing interactions between the various stakeholders involved. In most cases, cultural aspects are valid representations of successful partnerships and cooperation in different countries. Therefore, an organization ought to consider the new culture and government policies while venturing into the foreign country market. In the case of La Costbucks Company, it would encounter challenges in the process of expanding its operations in Shanghai and Beijing. The Chinese culture can have an essential influence on the business strategy of the Italian company, especially in business management and network building. Notably, organizations have numerous opportunities for investing in the Chinese market, which is dynamic. However, every organization ought to conduct a comprehensive study of the Chinese culture before venturing into the market. Since culture and business are complementary contexts of international trade, La Costbucks would need to understand the Chinese culture before venturing into the new market.
In the current era of increased business competitiveness, the global marketplace has become more accessible to organizations to operate internationally and enhance growth and profitability. Currently, cross-cultural teams and multinationals have become prevalent, thus making it possible for organizations to benefit from the diverse knowledge base and ideal approaches in addressing business issues. Although La Costbucks might encounter stumbling blocks while venturing in China, it can accrue numerous benefits if the management invests in acquiring insight into Chinese culture and international business. According to Garg and Berning (2020), China has a unique set of norms and characteristics of business operations that is different from that of Italy. Human capital, cultural sensitivity, and human resources are influential factors in international ventures. China has a unique political, legal, economic, and cultural environment that influences the complexity of commercial activities. Besides, human resources represent fundamental competitive factors in managing the opportunities and threats in international markets. Therefore, La Costbucks management will have to comprehend the cultural characteristics in both Shanghai and Beijing to prevent any conflict or marketing barriers.
China has transformed into one of the fastest-growing economies globally from its previous backward and isolated state. The developments of globalization, modern technology, and foreign direct investment have influenced the myriads of new lifestyles and thinking in the country. Currently, China is a frontier of international business based on the influence of the West. The Chinese internationalization and the opening of new markets have influenced the spread of new cultural values and characteristics. Therefore, companies must conduct comprehensive research on Chinese culture and values as relevant aspects of operating effectively and attaining set goals. Since China has notable market potential, La Costbucks would have an opportunity to thrive in the country. Garg and Berning (2020) argue that mianzi and guanxi are the main elements that international companies have to encounter after expanding to the market. Guanxi plays a considerable role in business operation as a universal concept of Chinese society and a commitment of two parties with universal obligations. Management consultants recognize guanxi as an informal connection of gaining approval of accessing the various business areas in China.
Pursuing a CSR strategy in China
Corporate Social Responsibility (CSR) is the extent to which an organization can integrate the social and environmental concerns into their operations and interactions with stakeholders. Over the years, organizations have faced extensive pressure in addressing the various social and economic expectations of stakeholders. The CSR organizations have initiatives and programs to support the stakeholders in embarking on strategies of social and environmental concerns. The strategic approach of CSR presents numerous growth opportunities for companies in China. According to Shen and Benson (2016), CSR is the primary determinant of the expansion of an organization to international markets. La Costbucks would achieve numerous benefits in pursuing CSR in China. For instance, the company would improve its reputation to the company and the general public. If the management focuses on activities that would enhance environmental sustainability, the consumers would be more willing to purchase high-quality coffee and French pastries. Research findings reveal that customers prioritize brands based on their social and ecological repercussions.
Besides, the company would attract employees and investors. Notably, the organizations involved in CSR are recognizable among the general public and to all the potential stakeholders. For instance, La Costbucks would attract potential candidates seeking opportunities for employment. In such a case, the management would find it easier to comply with Chinese values and standards. If the company starts earning goodwill through the CSR activities, the employees will maintain their loyalty with the company would lower its recruitment costs through a high turnover rates. In most instances, millennials prefer organizations with flexible work schedules and cultures (Shen & Benson, 2016). Therefore, the employees would earn self-pride through the set values and standards. Notably, the company would attract new investors since its reputation is a significant determinant if it would receive new investments. The company would enhance its image through CSR programs. Other firms, venture capitalists, and the government would send their investment proposals. CSR programs are effective ways of advertising brands to the general public. La Costbucks would have a certain level of publicity through ensuring that its products and services align with the various CSR activities. Social responsibility is an effective way of adding value to the available products and gaining a competitive advantage over close rivals in the market. Therefore, La Costbucks would utilize the strategy to downside other companies in the industry.
Furthermore, La Costbucks would build value and achieve significant gains through the CSR program. The employees would be more motivated to meet the needs of the targeted customers if the company adheres to the set CSR policies. Notably, they would maintain a working relationship with all other stakeholders to expedite the attainment of set goals. La Costbucks will enhance its transparency concerning contracts and supply chain management if it follows the set CSR policies. The Chinese customers would be more willing to purchase their products from the company since they will be assured that they meet the set quality standards. The social responsibility of the organization would expedite its success in the international market. Importantly, the company would minimize its overall costs of operation by avoiding any legal ramifications for breaching social responsibilities. For instance, the company would eliminate any errors in the production stage and meet the customer’s expectations. The managers would establish sustainable strategies in facilitating overall development. Therefore, the efforts of minimizing environmental pollution would be relevant in increasing value for the company in China.
Conversely, pursuing CSR would result in some disadvantages. For instance, La Costbucks would have to shift its profit-making objective. Although making a profit is one of the core objectives of every company, it would have to cuts its profit margin to pursue CSR. Notably, La Costbucks would increase its overall expenditure through its involvement in CSR. The company would incur high expenses by giving back to the community in the new market. If the management contemplated increasing the prices of the products to make up for the incurred costs, the customers would turn to the rivals in the market. Therefore, the customers would find it hard to survive during its onset venture in China. Notably, the Chinese would accuse La Costbucks of hypocrisy for complicity in repressive regimes, inadequate safety standards, and violence with the indigenous communities. In some instances, organizations can create illusions of complying with social responsibilities while they abuse corporate power.
Besides, a CSR program would hamper the reputation of the company in the new market. The CSR policies mandate organizations to reveal the shortcomings of their products if they violate the set program. If the current customers realized the flaws in the various products, they would lose faith in any other products or services, thus resulting in lower profitability. Notably, a CSR program can have negative impacts on the overall sales figures. Similarly, implementation of the program can make the customers impatient. During the onset of operation, every stakeholder would recognize and appreciate CSR and influence the company in gaining popularity. However, some of the customers can perceive the program as a public relation stunt if it fails to offer instant results, which might further affect the reputation of the company. If a company focuses so much on CSR rather than research and development, it would be difficult to have an advantage over close rivals in the market.
Key Cultural Differences between Italy and China
The Chinese culture has notable variations from the Italian values and characteristics. Business etiquette is a unique element of Chinese culture in the form of guanxi and mianzi. The two aspects originated from Confucianism as a political, religious, and philosophical institution. Confucianism and business are disciplines that share fundamental elements in business operations. Family guanxi is one of the most imperative relations as a basic unit of Chinese society. Notably, guanxi is a form of friendship with implications of exchange of favors to ease the access of various aspects in China. Abessolo et al. (2017) postulate that the form of social investment is imperative in expediting the effective operation of an organization. Therefore, the idea of guanxi can ease the expansion of a new company in the Chinese market. The process of creating interpersonal relationships can make it possible to obtain mutual advantages based on work positions and market prices. According to Zhao (2018), the Chinese recognize mutual relationships as critical aspects of expediting effective business operations. One of the essential elements of guanxi in Chinese society as the reciprocal obligations of the involved parties based on the acquisition of resources. The establishment of guanxi is a representation of the first step for Chinese business through interpersonal relations. In the first meeting, Chinese business persons are curious to know about suppliers and clients during the first meeting.
In contrast, the Italian businesspersons conduct the first meeting in the office of the host party to ensure that both parties can comprehend the possibility of collaboration between the two parties. Eventually, the session ends with the signing of a contract. One of the notable findings is that Italian culture is individualistic based on the idea that a person can realize themselves in a social community if their experience is following rules of conduct. Notably, the importance of guanxi in China and Italy are different based on the uniqueness of social relationships. In Italy, a network of contracts is not a necessity but can expedite a company attaining popularity. Arguably, Italians are proud of their products based on their unique culture and traditions. Any form of bribery or corruption might compromise an individual’s help in personal and business levels. The cultural differences between Italy and China determine the business growth and expansion to international markets. Italian business people show the capacity of avoiding a tendency of imposing rules and norms in a host country as a way of avoiding a dominant attitude.
Accordingly, three bipolar dimensions of motivational values are imperative in explaining the differences in human resource management practices between Italy and China (Roth & Winkler, 2018). The two countries have notable variations that determine the operations of companies and the management of employees. Employee participation is a unique cultural variation in the management of employees between China and Italy based on power distance. Italy has low power distance in that employees participate in the process of making relevant decisions regarding the operations in an entire firm. The top management maintains close and effective communication with the employees and all other relevant stakeholders. On the contrary, China has a high-power distance in that employees only know what is going on in their designated area of operation. Therefore, the employees are unlikely to communicate with the top management or take the initiative of giving suggestions or feedback regarding activities.
Embedded versus autonomy is one of the bipolar dimensions of motivational values. Respect for traditions, security, and social order are of great significance in an integrated society. The Chinese from such cultures find meaning in life through social relationships. On the contrary, Italians find life meaning through their uniqueness in need of support to express their feelings. Hierarchy versus egalitarianism is an equally relevant dimension. The Chinese recognize and acknowledge the unequal power distribution, wealth, and authority. According to Guest (2017), the employees have an obligation of fulfilling their duties connected to their roles. On the flip side, the Italians perceive each other as equals and share fundamental interests. The lower-level employees have an opportunity of communicating with each other and the top-level executives. Arguably, while the Italian culture focuses on the need for changing and developing a social environment, the Chinese focus on accepting the world as it is without any development. Equally, Italy and China have notable variations in the training of employees and reward system. One of the differences between the two countries is money spent on training possibilities. In China, organizations spend less than $4 annually on training for every employee. On the contrary, Italy vested in China spend as much money as they can on training activities. Notably, the senior employees in Italy have a higher education acquisition than seniors in China. Importantly, Italian based companies offer a wide range of perks as competitive tools to attract and retain competent employees.
According to research findings on cultural variations between Italy and China, the aspects dealing wit...