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Wal-Mart being a brand of United States and being a world largest brand in retail segment, they are planning to open a subsidiary in Indian market because they believe Indian retail market is one the growing market at current scenario. Moreover, 90% of their products and the services would source locally and this will help Wal-Mart to minimise its cost and maximise its market share and profits. And, this will also lead to the growth in the economy as it will lead to growth in the employment which will acts as a productive method for company as well as the Indian economy.
The primary motive to internalise the brand is the growth in the production rate and to witness more demand in the Indian market. Secondly, the key driver that has lead the company to globalise their brand is the recognition of the brand and to implement their strategy across the globe i.e. to provide the products and the services at minimal cost and to attain maximum customer satisfaction. Moreover, the company has introduced different stores to fulfil different needs of the customers such as Supercentres which confer wide range of products under one roof, Neighbourhood markets which provides groceries, pharmacy and general merchandise every day at low prices. The Marketside outlets are the ones providing fresh and delicious meals at great deals and they are mainly small neighbourhood stores. The last driving factor for Wal-Mart to operate in India is selling online. This targets the corporate who keep themselves busy at work and don't manage the time to avail the products at great deals.Therefore, Wal-Mart has introduced online shopping to provide comfort to their customers. India being highly populated country can never face any difficulty till the time brands and facilities like Wal-Mart provides to its customers.
Over the last few decades there has been a tremendous growth in the Indian retail industry. The industry has grown at a CAGR of 11% during FY04-07 accounting maximum share of food and grocery products. Even though the market was dominated by the small players and practicing unorganised process, the industry has gained in terms of revenue at CAGR of 19.5% during the period of Fy04-07, wherein, footwear and apparels made the maximum contribution towards the increase of revenue.
The retail industry has a effective links with the growth of the Indian economy. It can be measured by their high working capital and through their growth structure. There are many factors which has contributed to the growth of the Indian economy such as growth in the purchasing power of people, standard of living, urbanisation, growth rate of the private firms in the industry. The modernisation in the retail industry has given shape of introduction of the departmental stores and the super marts which provides products and services under one roof. Besides, the introduction of super marts in the Indian market, the advancement in the technology has contributed a lot to bring the retail segment upwards i.e. rural retailing, e-retailing. These all factors gives opportunity to big brands such as Wal-Mart's to operate their business in the Indian market and provide much more flexibility and effectiveness in the industry.
The brand is well known in the market due to its distinctive corporate culture and the value and the morals drives them to be a renowned brand across the globe. The prime corporate culture that the company follow is to save their customers money so that they can live better, healthy and effective lifestyle. Moreover, every member of Wal-Mart works with the same level of veracity and esteem that Mr. Sam, the founder, thought his company to be like. Therefore, Wal-Mart distinctive culture is making a difference for the customers, the members and the people who are associated with the brand. Hence, this makes the company distinctive in comparison to the other brands in the market.
Therefore, due to the above mentioned reasons and considering Indian retail industry as a strong market, Wal-Mart will make a profitable business by introducing subsidiary in India.
Broadly the activities of domestic HRM and IHRM are similar however; domestic HRM takes into consideration employees from one country only whereas in IHRM employees are from different countries, cultures and backgrounds. This is one of the major differences between domestic HRM and IHRM because when employing people of different national categories or when operating in different countries the working environment tends to become more complex.
IHRM is the one of the most important aspects that MNCs focus on because to effectively managing people located in various continents and cultures is a challenging task. Effective HR strategies have to be developed by an organization in order to effectively utilize its multinational workforce. (Dolan, 1996)
The figure above is a model of IHRM. As it can be seen it consists of 3 dimensions:-
There are three broad human resource activities namely procurement, allocation and utilization. (These include the 6 main activities of Human Resource Management like HR planning, Staffing , Training and Development etc. )
The country categories involved are the a) host country where a subsidiary is located (e.g. There is a subsidiary of WALMART in India as mentioned), the home country where the headquarter of the firm is located (USA where the headquarter of WALMART is located as mentioned) (Williams, 2005)
The three types of employees are: - Host Country Nationals (e.g. employees in India for WALMART), Parent Country Nationals (employees in USA) and Third Country Nationals. (Dowling et.al., 1999)
MNE's staffing strategy from PCN's to HCN's pr TCN's. According to Taylor, HR is an ingredient in developing advantages in highly competitive global world (Briscoe and Schuler, 2004 ; Taylor et al, 1996). Lorange predicts that to have an effective HR approach the company should pertain skills to compare their HR strategies from PCN's to HCN's (Lorange, 1986). Moreover, if the company goes global they need to focus on the training and development issues because what works at home doesn't work outside. So the HCN's must be given proper training in order to have better and efficient system at work (Black et al. 1999).
The company should be guided by the HR staff of the subsidiary in order to avoid conflicts between the PCN's and HCN's.
People Management Style - USA AND INDIA
The advancement in the technology has result in increase in the productivity levels in the organisations and led to shortage of labours. Hence, it is enforcing organisations to engage in effective and efficient recruitment methods and leading to a diverse workforce. Moreover, in America the HR department is becoming more competitive in nature in respect to provide the qualified set of people for the job and this is being created to giving them effective set of incentives.
(http://www.emeraldinsight.com/journals.htm?articleid=848307HYPERLINK "http://www.emeraldinsight.com/journals.htm?articleid=848307&show=pdf"&HYPERLINK "http://www.emeraldinsight.com/journals.htm?articleid=848307&show=pdf"show=pdf) Alison M. Konrad, John Deckop, (2001) "Human resource management trends in the USA - Challenges in the midst of prosperity", International Journal of Manpower, Vol. 22 Iss: 3, pp.269 - 278
As per the reports, Wal-Mart has got new structure i.e. they are reducing their market managers span of control in order to give the store managers opportunity to develop and implement productive styles at work. This will result in the stronger management at stores and better growth opportunities down the line.
The management style in the organisation differs from one another. The style of working in US is different from the Indian style of working. For example, in India the political connections plays an important role for the giant players but in America they does not have much role to play. Moreover, in America the top level does not have links with them; they operate business as B2B system. Despite the political concerns, the leadership style in managing people also varies from country to country. For example, in America there are five types of leadership styles that are taken into consideration while operating a business i.e. Directive, Participative, Empowering, Charismatic and Celebrity (Superstar). The initial four deals with the way subordinates execute their power and the last one is not in the hands of internal members. It is beyond the internal power.
Moreover, according to Hofstede, there is a major difference between Indian and American style of managing people. Hofstede theory for INDIVIDUALISM versus COLLECTIVISM states that the Americans stand as a professionals and are individualistic. Whereas, the Indian people believe in working as WE. This differentiates their style or working in the organisation (Hofstede, 2002).
People Management Mechanisms: -
Comparison between USA and India in people management mechanism
Being a manager- the roles and the duties of the manager differs from country to country. For example, in India the mangers must focus on the procedure and the custom that exists in the organisation. The caste system might be illegal but an effective hierarchical structure still exists in the Indian companies. On the other hand, the managers need to be safest while handling the cross cultural issues in the organisation. The people are treated equally. Moreover, in America all the individuals are appreciated for their hard work and thus given a proper time and chance during the decision making process in the organisation.
Approach to time and priorities- Taking US into consideration, it is highly time oriented nation and thus expects the employees to be punctual and articulate in their task. Not completing the task at the given time is a sign of inefficiency and might lead to severe consequences for the employees. The task completed in time is as sign of perfect management and efficient working techniques. As far as India management is concerned, its slightly different in comparison with US. The prime reason behind is that Indian community is high on the relationship part so there are chances of skipping the deadlines.
Decision Making- This process plays an important role for the managers and for the top level executives because productive and efficient decision will lead to flexible operations of the business. Therefore, in India, the culture is more of informal in terms of relationships between the managers and the employees of the company. Hence, the decisions are made by the managers and are delegated to the subordinates. And the subordinates how to meet the given objectives. Moreover, while considering cross cultural aspects one need to maintain respect and behaviour as per the position. For example, the manager arranging furniture will look inappropriate for that task, and hence it will lower your esteem in your organisation. So right person for the right job is followed in Indian companies. On contrary, in US the process of decision making is totally opposite, wherein , the employees has the freedom to speak during the meeting and their points are considered if valid. And they have the authority to speak directly at higher level management.
Communication and Negotiation Styles- Taking American style of negotiating into consideration, it is said to be hard sell style. Wherein, the employees tend to maintain strong pitch during negotiation in order to enthuse confidence and trust. They are inclined towards providing evidence for their work i.e. logical reasoning. Their style of communicating and negotiating with people is getting the work done in short span of time and attaining best combination of deals for their organisation. On the other hand, the Indian style of negotiating and communicating varied that from US people. The cross cultural concerns might be better option in Indian organisations if people understand the importance of the relationships. Operating business is based on the trust and so it takes time and patience to build a strong network all along. Moreover, the Indians are not confrontational at business front and it not easy for them to digest the fact; secondly, the decisions are taken by the top level management still it takes time to process. Lastly, it is not worthy to trust on word of mouth while make agreements. Hence, proper legal issue must be taken into consideration while communicating and negotiating deals of the organisations in India.
Overview of the Subsidiary Country - India
The success and the survival of any employee do not only depend on analysing the market trends and implementing them into their internal strategies for the development of the company but also the employee develop systems on performance including the recruitment and selection procedures. (Arthur 1994, Miller & Cardinal 1994, McDuffie 1995, Huselid 1995).
In India the workload on the employees is so heavy that they get demotivated and thus results in ineffective operations in the company. Hence, the employees must be given proper breaks i.e. not forcing them to work on weekends and other holidays. Instead they should be given freedom so that they get charged and can perform better in order to meet company's objectives. The communication process is quite structured in the Indian companies which acts as positive sign for the companies in India i.e. the open communication is encouraged from lower level to upper level and hence this practice leads to the satisfaction for the managers as well as the customers because their demands are directly conveyed to the top level management. The motivational factor acts as positive sign of the growth of the company. Therefore, the company must motivate their employees in terms of giving rewards and benefits for their tremendous work and appreciate in order to retain high performance at work.
To Conclude, Culture is an important aspect that should be looked at by an organization very seriously. It is a whole lot more complex than domestic culture because it involves different countries who have their own set of culture, local systems, patterns of behaviour etc. A multinational in order to be successful should adapt to these varied cultures. Proper training should be given to expatriates about the culture, cross-communication skills, etc. of the respective host country when they go on an international assignment. Hence, success and the survival of the organisation depends upon the internal and external calamities i.e. national and international culture to attain position and recognition in the market