HRM Considerations for La Gustocoffee’s Expansion into China

by | Apr 23, 2024 | human resource management

La Gustocoffee is an Italian coffee bar chain specialising in organic high quality coffees and French pastries. Its unique stance on ethically sourced delicious products have made it a big hit in Europe where it also has stores across the UK, France and Spain. La Gustocoffee is looking to break into the Asian market and is planning to open its first stores in Shanghai and Beijing (China).

As before, the new stores will operate in a very similar way to operations in Italy (HQ), with the same product line in order to retain their individuality and unique ethical selling point. A General Manager (PCN) has been identified and is available to be flown over to China in the first instance from Italy, but the company require more advice on staffing policy and whether to hire local staff for management positions (as well as at barista level).

The company has approached you, as an experienced HR consultant, to advise them about key HRM considerations for establishing their business in China. Your report should address the following key areas and make clear your reasons for recommendations:

What are the main challenges that La Gustocoffee will encounter setting up China?
Answers will debate:
a.    The key cultural differences between Italy and China and how this may impact HRM and managerial practice.
b.    The most effective IHRM staffing strategy to adopt (citing appropriate models)
c.   The difficulties expatriates (PCN’s & TCN’s) specifically may face adapting in China and ideas to overcome these.
d.     Discuss ethical issues which may be relevant for a European MNC setting up in China, with a specific focus on ‘migrant workers’, decent work (ILO) and reward.
This case study assignment should be undertaken as an individual piece of work. As it is an academic piece of work you must support your analysis, arguments and recommendations by referencing from published material (academic text books, peer reviewed journals and appropriate media). APA reference style must be used.

Assignments should be in report format (i.e with a contents page, sections, subsections, a clear introduction, a conclusion, comprehensive referencing and bibliography).

Recommended Structure:
1.     Abstract/Executive summary (word count not included)
2.     Introduction (approx.300 words)
3.     Discussion (approx.3000-3500 words)
4.     Conclusion (approx.300 words)
5.     Recommendations. (approx.300 words) (Acceptable to bullet point these).
6.     Reference List (word count not included)
7.      Appendices (word count not included)

Word length should be approximately 4,500 words (+/- 10%). This does not include appendices, bibliography or any supporting tables/graphs.

Other texts/articles which you may find useful for both the assignment in addition to the reading given within the units. NB: this is not essential reading but a supplementary suggestion to help with expanding your viewpoints in certain areas. Please also conduct your own research.

Chan C K-C & Hui E S-L (2012) ‘The Dynamics and Dilemma of workplace trade union reform in China: The case of Honda workers’ strike. Journal of Industrial Relations. 54:653

Chan J, Pun N & Selden M (2013) ‘The politics of global production: Apple, Foxconn and China’s new working class’. New Technology, Work and Employment, 28:2, pp100.
Chan J (2013) ‘ A suicide survivor: The life of a Chinese worker’. New Technology, Work and Employment. 28:2,pp84.
Friedman E (2012) ‘Getting through the hard times together? Chinese workers and Unions Respond to the Economic crisis’. Journal of Industrial Relations. 54:459.
Leopold, J., Harris, L., and Watson, T. (eds)  (2007) The Strategic Managing of Human Resources, Harlow, Financial Times/Pitman Publishing.
Mendenhall, M., Punnett, B. and Ricks, D. (1995) Global Management, 1st Edition, Blackwell, Oxford.
Malcolm Warner (2010): ‘In search of Confucian HRM: theory and practice in
Greater China and beyond’. The International Journal of Human Resource Management, 21:12, pp2053-2078

 

Sample Answer

Sample Answer

 

Title: HRM Considerations for La Gustocoffee’s Expansion into China

Abstract/Executive Summary

This report provides insights into the key HRM considerations for La Gustocoffee as it expands its operations into China. It explores the challenges the company may encounter, cultural differences between Italy and China, effective IHRM staffing strategies, difficulties faced by expatriates, and ethical issues relevant to a European MNC setting up in China.

Introduction

As La Gustocoffee ventures into the Asian market by opening stores in Shanghai and Beijing, it is essential to address the HRM aspects crucial for a successful establishment. This report will analyze the main challenges, cultural differences, staffing strategies, expatriate adaptation difficulties, and ethical considerations that the company should be mindful of in its expansion into China.

Discussion

a. Cultural Differences between Italy and China

Cultural disparities between Italy and China can significantly impact HRM practices and managerial approaches. While Italy values individualism, China emphasizes collectivism and hierarchy. This variance may influence leadership styles, communication norms, and decision-making processes within the organization.

b. Effective IHRM Staffing Strategy

Adopting a geocentric staffing approach can be the most effective strategy for La Gustocoffee in China. This model advocates for hiring the best talent regardless of nationality, aligning with the company’s ethos of promoting diversity and inclusivity. By leveraging a mix of PCNs, HCNs, and TCNs in managerial positions, La Gustocoffee can foster cross-cultural synergy and local expertise.

c. Difficulties Faced by Expatriates in China

Expatriates, both PCNs and TCNs, may encounter challenges adapting to the Chinese work environment, including language barriers, cultural shock, and unfamiliar business practices. To facilitate expatriate adjustment, La Gustocoffee can provide intercultural training, mentorship programs, and networking opportunities to support their integration into the new cultural context.

d. Ethical Issues for a European MNC in China

In establishing its presence in China, La Gustocoffee must address ethical concerns related to ‘migrant workers’, decent work standards (ILO), and fair reward practices. Ensuring fair treatment of employees, promoting labor rights, and upholding ethical supply chain management are essential for maintaining the company’s reputation and aligning with global sustainability goals.

Conclusion

Navigating the HRM landscape in a new market like China requires a strategic approach that acknowledges cultural nuances, prioritizes talent diversity, supports expatriates’ adaptation, and upholds ethical standards. By leveraging these insights and recommendations, La Gustocoffee can establish a strong foundation for success in its expansion endeavors.

Recommendations

– Conduct cultural sensitivity training for all employees to bridge the gap between Italian and Chinese work cultures.
– Implement a geocentric staffing model to leverage diverse talents and perspectives in managerial roles.
– Offer comprehensive support programs for expatriates to facilitate their adjustment to the Chinese work environment.

Reference List

Appendices

 

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