Ihrm 2 Final

8/3/2019 Ihrm 2 Final

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International Assignment Strategy:International Assignment Strategy: CreativeWorkzCreativeWorkz

Going GlobalGoing GlobalMaldives and Middle East (UAE)Maldives and Middle East (UAE)


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Undisputed market leader in stationery industry

A manufacturing organization having annual 20% sales growth during last 5

years

Incorporated over fifty years back with ten employees to manufacture

goods by using 100% locally available raw materials.

Currently Exporting to India

Key suppliers from Europe & Indonesia

Seek to expand operations to UAE & Maldives (Small Scale Operation)

Target Market: Offices, Educational Institutes and Hotels

CreativeWorkz Stationary


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Factors Influencing Success of an International Assignment

Exogenous factors (External Factors)

Nature of competitors,

Technology available and the volatility of the industry.

Political conditions, the economic conditions,

Legal requirements and the socio-cultural conditions

Endogenous factors (Internal Factors)

Stage of Internationalization (Domestic, International, Subsidiaries/Multinational/JointVentures, Transnational)

Structure of the international operations of the organisation, how internationally orientated the

senior

Competitive strategy in place and

The senior managers experience in managing international operations

(Schuler, et al., 1993)


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Maldives PEST Factors

Political

y Government support to minimize entry exit barriers

y Continuous pressure on the government to liberalize

the duty structure

y Newly changed government (after 30 year) is highly

concern on countries education standards.

Economic

y Maldives higher economic growth rate( Around 10%)

y Inflation is maintained around one digit level.

y Recent trade agreement between Sri Lanka and

Maldives

y Stationary requirements mainly depend on import.

y Time required to start a business is low.

y Tourism,Fishing,Agriculture,Industry are the most

prominent contributors to GDP. Industry is in 4th

place.

Social

y The fast emerging concept of standard lifestyle,

y Increasing western fondness of the younger

generation

Technological

y Low technology levels used by majority of

manufacturers

y Stationary industry is highly needed technology

concentration.

y Agreements signed with European countries for

partnerships in order to access high technology


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UAE PEST Factors

Political

Politically stable government.

Government support through tax reductions

Government has a long term plan to increase

literacy rate.(53% in 1989.Now it s around 91%.)

Economic

Steady growth as an emerging economy(Growth

is around 3.2%)

Inflation is 1.9%

It is the thirty-fifth-largest economy

Social

Steady growth as an emerging economy.

Several nations are living in UAE such

as SouthAsian,Indian, Pakistani,Bangladeshi, Chi

nese,Filipino,Thai, Westerners

Technological

Increase of investment in new technology

Continuous focus on improving quality

Reduced production complexity


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Market Potential - Maldives

1. Population - 394,999 which includes approx 80,000 expats (July 2011 est.)

2. GDP (purchasing power parity) $2.734 billion (2010 est.)

3. GDP Per Capita $6,900 (2010 est.)

4. Unemployment rate - 14.5% (2010 est.)5. Labor Force - 110,000 (2010 est.)

6. Import partners - Singapore 24.7%, UAE 17.2%, India 8.6%, Malaysia 8.1%, Sri

Lanka 5.7%, Thailand 5.7%, China 5.6% (2010)

Source: CIA World Fact Book


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Market Potential - UAE

1. Population - 5,148,664 (July 2011 est.) Approx 80 % of expats

2. GDP (purchasing power parity) $246.8 billion (2010 est.)

3. GDP Per Capita $49,600 (2010 est.)

4. Unemployment rate - 2.4% (2001 est.)5. Labor Force - 3.705 million (2010 est.)

6. Import partners - India 17.5%, China 14%, US 7.7%, Germany 5.6%, Japan

4.8% (2010)

Source: CIA World Fact Book


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Cultural Attributes - UAE

Collectivism: Group consciousness and family are the major values that guide

peoples behavior.

Power Distance: A belief in authority and hierarchy (high power distance). Cultures

that are high on power distance accept power and hierarchy in society and are low

on egalitarianism. In such cultures, less powerful citizens are accepting of unequal

power distribution in society. The United Arab Emirates is high on power distance.

Uncertainty Avoidance: United Arab Emirates tend to have low tolerance for

uncertainty. They avoid ambiguous situations, view both conflict and competition as

threatening, and value security over adventure and risk.

Masculinity-Femininity: The United Arab Emirates shows a preference for

masculinity.

High-Low Context: UAE have close connections among group members


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Federal law no. 13, of 1988 ,the commercial company law and its by laws are thegoverning code of conduct for setting up businesses in UAE

It sets out the requirements in terms of share holders,directors,minimum capital levelsand incorporation procedures

Licenses for all businesses should obtained from Chamber of Commerce and Industryhowever there are exceptions

Bank and financial institutes Central Bank UAEInsurance and related Ministry of economy and commerceManufacturing Ministry of Finance and industryPharmaceutical and medical products Ministry of health

Legal Framework in setting up business in UAELegal Framework in setting up business in UAE

Legal Framework in setting up business in MaldivesLegal Framework in setting up business in MaldivesForeign investments are governed by both laws under the companys act (10/96) andforeign investments law (25/79) which came into action in 1989Must have one or more Maldivian national as partners whos capital share should beminimum 51%Licenses for all businesses should obtained from ministry of trade and industries and

however tourism related investments are to be obtained from ministry of tourism andaviation


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Starting business in Maldives

1.Possible Option to start business in Maldives:

Registering a joint venture investments - 51% or more is held by a

Maldivian (Applicable tax : 1.5% of gross turnover or 7.5 %of net profit)

http://www.investmaldives.org


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Starting business in UAE

1. 51% participation by UAE nationals is the general requirement for all UAEestablished companies

2. Available options to start a business in UAE :

General partnership company

Partnership-en-commendam

Joint venture company Public shareholding company

Private shareholding company

Limited liability company

Share partnership company

3. Recommended strategy : Joint Venture Company, to overcome massiveinvestment requirements

4. Recruitment of 15% of Emiratis staff for non-important position

Source: www.worldwide-tax.com


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Entry and HRStrategy - Maldives

1.Establishment of Administrative Office in the capital Mal

2.Products Through direct export (International Operating Model)International (Export) OperationsProducts and services are opened up to markets in other countries, production facilities in Sri Lanka

3. Advertising outsourced Targeting offices and Hotels

4. through existing local network initially, but later to establish own distribution

network

5. A mixture of Ethnocentric and Polycentric approaches

Export FromExport FromSLSL

OutsourcedOutsourcedDistributionDistribution

AgentAgentCustomerCustomer


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Entry and HRStrategy Maldives Contd...

6. Management and administrative staff from Sri Lanka. All other levels from host

Country Nationals. Parent Country Nationals (shortage of experienced local

talent, sales force)

7. Sales managers to be appointed from Sri Lanka with sales team to be comprises of

locals

8. Human Resource Manager and staff - Host Country Nationals

9. Sri Lankan HR lead to be established in Sri Lankan business to manage Expatriates

10. Recruitment of Host Country Nationals for distribution staff - Later during

expansion of distribution network


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Entry and HRStrategy - UAE

1. Establish administrative office in Dubai

2. Product strategy Direct export initially

3. Distribution through existing local network initially, but later to establish

own distribution network

4.4. A mixture of Ethnocentric, Geocentric and Polycentric approachesA mixture of Ethnocentric, Geocentric and Polycentric approaches

5. Higher Management level Parent country national

6. External contacts and Customer relations Priority for host Country

Nationals and others with Arabic language knowledge and middle eastern

working experience

7.7. Human Resource ManagerHuman Resource Manager Host country or third Arabian countryHost country or third Arabian country

8.8. Structure facilitating power distanceStructure facilitating power distance


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Proposed Structure Maldivian Operation

SL Expats.

Combination of Expats., Indian

Expats And Local Talent

Sri Lankan Expats.Manager Sales & Distribution

Sales Executives

Sales and DistributionCoordinator

Sales Staff

Warehouse &Distribution Staff

MaldivianHead of Operations


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Proposed Structure UAE Structure

Manager Sales & Marketing

Sales ExecutiveMarketing Executive

Sales & Marketing Staff (Combination

of Locals and Expats)

Distributor

reps

Distributorreps

Arab NationalistHead of Operations

Sri Lankan ExpatHead of Sales & Marketing

CEO

Finance and IT Manager HR & Admin

Regulationsand

corporateaffairs

02 HR Executives

(01 Arab national, 01Sri Lankan Expat)

IT Executive

Sl Expats.

Combination of Expats. And LocalTalent


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Human Resource Planning

Focus on operating structure International Operation Model

Required manpower based on 03 year roll out plans

Identification of required level of competencies and type of employees

at each level

Facilitating hierarchical structure Ensuring Power Distance Cultural

Dynamics


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Recruitment & Selection

Technical ability (eg: selling skills)

Internal Candidate Selection and Internal Advertizing

Cross-cultural suitability (eg: Language, exposure to middle east workingconditions)

Use of culture adaption tests Family requirements/conditions

Country-cultural requirements

Industry requirements

Language Current Performance Ranking

Previous Exposure External Recruiting


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Objectives of International Compensation Strategy

Consistent with the overall strategyConsistent with the overall strategy, structure and business needs of the

organization.

Must work to attract and retain staffMust work to attract and retain staff in the areas where the business hasthe greatest needs and opportunities, hence must be competitive and

recognize factors such as incentive for foreign service, tax equalization

and reimbursement for reasonable costs.

Should facilitate the transfer of international employeesfacilitate the transfer of international employees in the most cost-

effective manner for the firm.

Must give due consideration to equity and ease of administration.equity and ease of administration.

Compensation Strategy


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The Balance Sheet Approach

The basic objective is to keep the expatriate wholekeep the expatriate whole through maintenance of

home-country living standard plus a financial inducement to make the package

attractive.

HomeHome--country paycountry pay and benefits are the foundations of this approachthe foundations of this approach

Adjustments to home packageAdjustments to home package to balance additional expenditure in host

country

Financial incentivesFinancial incentives (e.g., expatriate/hardship premium) added to make the

package attractive


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Major Categories Incorporated in the BalanceSheet Approach (cont.)

Goods and services

Home-country outlays for items such as food, personal care, clothing,

household furnishings, recreation, transportation, and medical care.

Housing

Major costs associated with housing in the Arab countries

Income taxes

Parent-country and host-country income taxes.

Reserve

Contributions to savings, payments for benefits, pension contributions,

investments, education expenses, social security taxes, etc.


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Balance Sheet Creative Stationary

Additional Costs Paidby Company

Housing

Goods andServices

Goods and

ServicesGoods andServices

Housing

Housing

Income Taxes

Host-CountryCosts Paid byCompany andfrom Salary

Home-CountryEquivalentPurchasing

Power

Host-CountryCosts

Home-CountrySalary

Income Taxes

Home- and Host-

Country Income

Taxes


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Other Allowances/IA Policies CreativeStationary

Benefit UAE Maldives

Housing Allowance Need to provide

Transportation Allowance, Vehicle Allowance

Leave As per local regulations +

Special leave

As per local regulations +

Special leave

Medical & Insurance Insurance Scheme Insurance SchemeVacation 01 company paid up &

down travel per annum

01 company paid up &

down travel per annum

Holiday Expenses Allowances Actual Reimbursement limit

Spouse Only for Snr. Executives Not allowed

Education for Children Company Paid Not allowed

Incentive Pay Sales Staff Sales Staff

Cultural Development Facilitate host country

cultural events

Facilitate host country

cultural events

Duration 01 02 Years 01 02 Years


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Performance Management Model


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Performance Management Model

Semi-annual Reviews

Customized objectives based on type of assignment (Eg: sales, Marketing,

Regulatory)

Same review criterions as per home country to safe guard equity

Link to Pay, Incentives and Promotions

Driven by HC HR lead line manager


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Training & Development Model

T&D

Plan

Pre Cultural

Adjustment and

Post Cultural

Training Needs

(eg: Language)

Business Driven

Training Needs

Individual Training

Needs

Change

Management

Training


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Training and Development Methodology

Use of host country nationals in providing cultural based training

Use of e-training and online training facilities to minimize cost

Use of continuous mentoring and coaching system

Major business training provided at home country (eg: New sales billing

system, New ERP system)


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Disciplinary Management

Follow same disciplinary management process with required adjustments as

per local legal regulations (if required).

Provide awareness on process

Process to be initiated and managed by local country HR with guidance from

PC HR

In the event of breach of country law local legal regulations/practices to be

followed.


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Repatriation Process Steps

Preparation (Driven by PC HR) Develop plans for repatriation considering overallHRP,business objectives.

Physical Relocation (Driven by HC HR) Remove all duties, Checklist to monitorassignment completion along with PDP, Appoint re-pat buddy to smoothen transfer,

facilitate re-location process of family providing special concern for children'seducation

Transition Stage (Driven by PC HR) Facilitate relocation, provide administrativesupport on other requirements and registrations (eg: renewal of diving license)

Re- Adjustment Stage (Driven by PC HR) Facilitate new role and duties, Trainingon new business setups, Appoint counsellors/mentors and periodic evaluations


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Ihrm 2 Final

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