Introduction
The issue of expatriate’s adjustment
has been in the HRM literature for a long time. The globalization of the
operations of many firms in the world is leading to a scenario where many
managers will spend many of their years or careers while working abroad. The
issue of the management of expatriates has been a very important one in these
organizations. The costs that the firms usually incur in having the expatriates
are high for instance in terms of the fringe benefits, the education and health
allowances, return air fairs and the huge salaries. There is usually a noted
high failure rate that can be faced by the companies that use expatriates due
to the fact that the expatriates had difficulty adjusting to the life and work
in a different culture. This can happen due to abrupt and little preparation on
the part of the employee who is being sent to go and work abroad (Andreason
& Kinneer, 2005). The paper will explore how Coca Cola Company expatriate
from South Africa can adjust to the working conditions in China.
Company
Background
Coke was founded in 1886 by an
Atlanta chemist, John Pemberton. During that period, the company was selling
just 9 glasses per day. The company was later sold to Candler who later sold it
to Woodruff in 1923. The products of the firm started to be marketed all over
the world after the purchase by Woodruff. The firm had reached the mark of
selling 1 billion bottles per day in 1997. In 2011, 11.7 billion bottles were
sold throughout the world (Coca Cola, 2012). The mission of Coke was to inspire
moments of optimism, refresh the world, make a difference and create value for
people (Pendergrast, 2004). The firm’s visions include lean and effective
production, responsibility to the planet and maximization of shareholders
returns. The firm has over 6000 brands which are sold all over the world.
The
critical success factors of Coca Cola Company
The marketing operations of the firm
have ensured that the firm remains the world’s most recognized brand. The firm
greatly differentiates it products from those of the competitors and thus
allowing the firm to have a sustainable competitive advantage from the product
quality that result from the differentiation. The other success factor of the
firm is the integration of technology and the high level of innovation that is
found in the operation of the firm. The firm used vending machines especially
in North America, where the customers could be able to buy the products of the
firm more easily. The fridge pack innovation that the firm came up with also
led to an increase in the growth of the firm (Mobley, Wang & Li, 2009). The
low mark up pricing of the products of the firm during the festive seasons has
also contributed to the success of the firm. the firm’s other critical success
areas lies in the promotional activities that the firm engages in for instance
the firm has been a sponsor of major world events such as the Olympic and FIFA
world cups.
Environmental
analysis of the firm
The
environment of the firm can be analyzed through the use of a number of
instruments for instance through the use of PESTEL, Porters 5 forces and SWOT
analysis
PESTEL
analysis
Political factors that affect the
operations of the Coca Cola Company include the different tax regimes that
characterize the countries where the firm operates. There are also labor laws
that restrict the minimum wages that should be paid out to the workers of the
firm. Finally, there are also the political stability and or instability issues
that affect the operation of the firm for instance conflicts and other
political upheavals that affect the operations of the firm (Daft & Marcic,
2009). There are also economic factors that affect the various operations of
the firm. The first includes the volatilities in the foreign exchange market
especially due to the fact that the firm operates in over 200 countries. The increasing
interest rates are also leading to an increase in the costs to the firm for
instance the debt financing of the operations is increasingly becoming
difficult. The bleak global economic outlook would also have a negative effect
on the purchasing power of the various consumers thus a potential for reduction
in revenues (Madura, 2007).
The socio-cultural factors that
affect the operations of the firm include the changing consumer preferences
especially due to the realization of the effect of the products of the firm.
Coke has been able to respond to this through the addition of diet products.
The firm has also been able to add new products such as water and sports drinks
due to the social trend of fitness (Singla, 2010). Technology has also affected
the operation of the firm; the company has been able to increase the quality of
its products through the use of new technologies. The firm has also been able
to adopt technologies such as those that allow for recycling bottles so that
the effects on the environment can be minimal. According to Boone & Kurtz
(2010), the firm has also used technology to makes trendy bottles that have a
higher appeal to the youthful consumers.
The
legal factors that affect the operations of the firm include those related to
the safety of the various products of the firm. The Food and Drug
Administration (FDA) produces laws that govern the packaging and labeling of
products, and the general safety of the products (Pendergrast, 2004). The firm
is also affected by the issues of the environmental protection as water is a
major ingredient that the firm uses. Finally, there are environmental issues
for instance the sales are dependent on the weather with the products being
sold mostly in the summer and hot weather. The sales are very low during the
winter and rainy weather.
Porter’s
5 forces analysis
The porter’s five forces are used to
determine the competitiveness and thus the attractiveness of the industry in
which the firm operates. The threat of new entrants is low due to a number of
reasons. There is a high costs that are involved in the marketing and
advertisement of the products and brands of the firm thus block some firms. The
firms in the industry have high customer loyalty thus will most likely not
switch. The new entrants will also fear retaliation in the form of new product
lines and price wars (Pendergrast, 2004).
The
competition within the industry is intense between Pepsi and Coke as they both
compete globally in over 200 countries. The market growth has been declining in
all sectors by about 1.1 % for all the firms and the market share is majorly
captured by Coke and Pepsi. The two major firms also compete in terms of
differentiation and advertising rather than on prices. The threats of
substitutes are high in the industry for instance tea, juices, coffee, beer and
water. This threat is high as there are low switching costs on the part of the
consumers. The perceived value or price is low in the industry as the consumer
choices are informed by the advertisement. Thus, for the substitutes to
establish, they will need to invest in massive advertisement and brand
awareness (Pendergrast, 2004).
The
bargaining power of the buyers is high to medium depending on the outlet. For
the fasts food outlets, the power is high due to the fact that they purchase
the products in bulk. However, in the convenience stores, the power is slightly
low to high as the customers have to pay superior prices. Finally, the
bargaining power of the suppliers is low due to a number of reasons. The
switching cost from one supplier to another is low due to the basic nature of
the raw materials that they supply. The suppliers are also many and thus when
the firm severs link with one they can easily jump onto another (Hill &
Jones, 2010).
Challenges
faced by expatriates
The major problem that affects the
expatriates is how they can be able to adapt to the organizational and the new
national culture. These arise from the personality of the expatriate and the
differences in the home and foreign country (Routamaa & Rautiainen, 2002).
Expatriate adjustment refers to the degree of the environment coordination of
the person and their personal feelings. The adjustment therefore refers to the
comfort of the person to the job, socialization and the aspects of
psychological comfort with the host culture in terms of the housing, food and
transportation. There are three main dimensions that can be learnt from the
case. They include work adjustment, general living adjustment and social
interaction adjustment (Lan, 2002).
Expatriate
adjustment problem
There were a variety of problems
that were noted. The problems that the firm was undergoing through were greater
than those that the employees had been told. There was also a low skill of the
workforce of the firm and a general lack of professionalism in the running of
the firm. There were also problems that were noted in some very optimistic
break even analysis and profitability. The board members of the bottling
company in china were not sure of how the problems that were being faced could
be solved. The Board also had some members who could not be able to carry out
their jobs although they were promoted on the basis of their seniority and
loyalty to the firm. The collectivism and high power distance in China led to
the formation of a special relationship between the members of the firm. The
low level employees offered obedience and loyalty to the superiors who in turn
offered protection and consideration. This brought about problems in
implementing the changes that were proposed.
There
was also the issue with the organizational structure of the firm (Matrix
structure). There were unclear responsibilities and reporting lines, little
duty delegation and centralized decision making in the firm. The expatriate offered
a number of changes for instance decentralization of the decision making and
many other. The Board Chairman did not back the changes due to the opposition
from senior staff. There were disagreements as the expatriate’s actions
according to the Chairman were rattling the people who are important to the firm
and thus led to the termination.
Reflection
of the problems
The expatriate would have taken more
time in building relationships that would help in the selling of the various
change proposals that he had. He never backed down as taking the time would lead
to his assimilation into the culture. On the
other hand, the expatriate GM misjudged the importance of culture for
instance in terms of the power distance and decision making, the long term
orientation of the Chinese where activities are to be done for their long term
benefits and the collectivist views for instance seniority in the promotions
and other benefits. The promotion issues and the membership of the board should
have been resolved if the General Manager (GM) understood the intricacies and
the working of the Chinese (Hofstede, 1991).
How
Coke bottling plant deals with the issues of expatriate adjustment
The problems that were faced in
expatriate adjustment can be understood from the theory of work role
transitions; this has been used to explain the varied transitions that
expatriates make in adjusting to their new roles in the host countries and how
they can adopt the culture. First, there can be personal development and change
to accommodate the new roles or changing the way in which the role is done.
This latter option failed at the Coca Cola bottling plant in China.
The focus should be on adjusting to
the new role. The strategies include replication, exploration, determination
and absorption. Determination involves changing the parameters of the role and
not the skills and core values. Exploration involves the change in role and
person parameters as the new roles will influence the person (Nicholson, 1984).
Absorption involves undertaking a lot of personal change so that the demands of
the new job can be accommodated; involves little change to how the job is done.
Finally, replication involves making slight changes to adjust to new role; thus
continuing to behave as before without consequences (negative) to the settling
on the job and performance.
At
the firm, the GM was employed to bring about changes to the practices and
norms. Later, the Chairman wanted the GM to show conformity to the very norms
and practices (Nicholson, 1984). The implied psychological contract of the GM
was that he could use determination strategy to bring about the changes that
were needed. The changes that were proposed were thwarted as the chairman who
had apparently given him the free hand in running the organization. The GM was
encouraged to use more of absorption strategy through conforming to the
organizational practices and norms. However, this would conflict with the goals
of his hiring; improved profitability.
The
expatriate, GM, was also faced with novel social and cultural ways as he had
never worked in SE Asia before. This could have been bridged through the use of
seminars where the expatriates are introduced to the local business scene. They
can learn about the culture characteristics such power distance, collectivism,
time orientation and uncertainty avoidance etc. Other cross cultural management
training can also be able to help for instance acculturation which would lead to
the adoption of the exploration strategy where he would change himself to
improve his understanding of the local Chinese culture (Nicholson, 1984).
Conclusion
The
expatriate adjustment is a very important factor that must be considered by a
firm. The problems that are found out in the firm include both the different in
organizational and national culture. The effects were massive as the
partnership crumbled just after take off. It is important that the terms are
clearly indicated in writing to avoid the cases of the Board going back on
their word. Also, the expatriates should be able to clearly understand the
culture in which they are going to work in before they can embark on the
journey. When the two considerations are looked into the adjustment will be
easier.
References
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& Kurtz, D. (2010), Contemporary
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