Danone: A French Multinational Food Company

International Human Resource Management is one of the critical aspects of the multinational companies. There are many functions performed by the HR in the company. It encompasses systems and collective employment practice. It engages people and leads them towards a common purpose. It also adopts such practices which make line managers and specialist managers to manage workforce groups. International HR is concerned with the relationships of internal and foreign environment. Danone is a French multinational food company based in Paris. It conducts business operations in more than 130 countries and generates sale €21.9 billion in 2016 (Danone.com, 2017). Most of the business operates in emerging countries. The total revenue is generated from dairy products, water, and nutrition products.

The product portfolio includes dairy and nutrition products which serve at a national and international level.  The main brands are Activia, Actimel, Danimals and Yocrunch, waters. In the past few years, company has adopted more aggressive business and development strategies. In the emerging markets such as Asia, Israel, and other growing countries, the firm has adopted different tactics such as joint venture to maintain steady expansion.  The present report provides detailed information about the international human resources practices and its complexities. It also provides in-depth analysis issues related to cross culture environment and solutions to overcome these problems.

a. Complexities involved in entering a global market.

Expanding business at a global level is also a challenge for business organizations. There are different types of challenges faced by a corporation while entering the global business environment. However, it is also beneficial for the business enterprises. Danone is a food Corporation Company, which produces and export packed food to several different countries (Leitner, 2016). The firms mainly generate its business from dairy products, nutrition, and pharma drugs. The company operates its business at an international level, especially in the emerging Nepal and Malaysia. Following are the complexities involved in the global market: 

Cultural Barriers

If any business wants to expand its business in a foreign territory, first it needs to evaluate culture and social habits of the customers. Culture has a huge impact on the business of company. In different countries, people live their life and consume food according to their culture. In addition, it is also essential to select an appropriate customer segment before entering to the global market (HULT International Business School, 2017). In every market, local shops are dominating because they are aware of local cultural aspects.

Expanding Business to Global Level

Political risk

The political risk in international business is instability and uncertainty. The political conditions of emerging market are more likely to be unstable and offer more challenges to business. Issues such as ill-defined policies, corrupt government, and restricted opportunities can pose difficulties for Danone. In addition, a growing trend towards single economy makes business landscape hostile. For example, in Nepal and Malaysia internet and social networking are allowed; however, same is not allowed in other countries such as China. This political regulation can negatively impact the business of Danone.

Exchange rate

Danone is French company so during expanding business in new global destinations firm need to evaluate its financial performance. In the domestic market, the company has a specific idea regarding budget and financial growth. On the other hand, in the international destination firm need to evaluate expenses and cost of production. The economic conditions of Nepal are not stable, which may lead the corporate to lose target customers effectively. It can adversely impact on the human resource of the company. Monitoring international exchanges rate is a must for Danone.

Foreign Laws and Regulations

The business laws and regulations are different at different places. In the global era, each country establishes different types of laws for business which creates threats to a foreign company. It is essential for the firm to evaluate the local laws of the country before entering the market (Bloomfield, Brüggemann, Christensen, and Leuz, 2017). Danone is involved in the food industry; therefore, it has to evaluate the laws pertaining to the food industry. In the international business, food safety standards become a major problem. Apart from that, trading laws and tax implications also become a threat for Danone.

b. International business development strategies and its implications

While entering in the international business, there are many development strategies which can be selected by the corporate organizations. In the present time, Danone conducts its business operations in emerging counties like India, China, Israel and Turkey. The food company can expand its business in developing countries like Nepal and Malaysia (Hwang, Zhao and Chin, 2017). Both of them are small but quite developed countries and culturally diversified. The best strategy for expanding into international market is joint venture. It is a business agreement in which two companies usually enter to achieve specific goals. The firm is already in various joint ventures in different global destinations. Following are the benefits and limitations of joint venture in Nepal and Malaysia.

Complexities Involved in Global Market

Benefits

• It helps the company to capture a new market in the easiest form. By working in the joint venture, Danone can understand and promote its products and services. Since, it is a business agreement so the Food Company works independently and promotes its brand in a better manner.
• Developing business in the joint venture will allow Danone to access resources such as specialized staff and technology. Through strategy, the company attracts more investors and working capital so as to maintain long-term success.  

Limitations

• The joint venture creates a great imbalance between two parties with respect to assets, expertise, and investment. Working in the joint venture creates miscommunication with another firm, so Danone needs to clear each objective of business; otherwise it results in a negative impact on a joint venture.
• Each company has different management and leadership style. In the joint venture, culture can create an adverse impact on the workplace environment. Employees have different values and beliefs (Meyer and Xin, 2017). Working in another country’s culture can result in conflicts and problems for current atmosphere.

Impact of Human Resources Management

In the joint venture, two businesses merge to work with each other. It helps both businesses to expand their operations and add more customers effectively. In the joint venture, human resource is highly affected. Each business firm has its own working culture and environment. Working in the joint venture in any country like Nepal and Malaysia can result in cultural barriers and conflicts for everyone. So, each corporation needs to involve deep planning and allocated resources effectively. There are three dimensions of IHRM which are HR activities, types of employees and countries (Trivikram, 2017). HR activities include procuring, utilizing and allocating the human resources. In these activities, firm needs to make in-depth planning and allocate resources effectively in a subsidiary company to maximize efficiencies and increase productivity. The types of employees and countries include host country, domestic country, and another country (the native country of employees). Working in the international business, Danone needs to hire employees from the diverse culture. Here nationals of various countries contribute their skills and efficiently for the growth of the organization. However, the business also needs to provide healthy workplace environment so future conflicts can be avoided. 

Hofstede’s model

Hofstede’s cultural dimensions model is the framework which describes cross culture framework communication. It helps to evaluate the impact of culture on values, behavior, and structure of an organization or society. The cultural dimension is divided into six different parts. The USA is considered as one of the best suitable countries (Frampton, Zafar, Bohara and Steinberg, 2016). The political stability and workplace culture are highly diverse. Following is the cultural analysis of Nepal:

Power distance

It determines how subordinate respond to power and authority. In Nepal, power distance is high. It means higher authority is not friendly with their suburbanites (Hofstede Insights, 2017).  In this country, order passes in hierarchy level and usually uses the autocratic management style.

Individualism

It shows individual perception and dependency on society. Nepal scores low under this segment. It means that people are believed in long-term business relationship and loyalty.  People in Nepal are reliable and employees welcome to other countries in society (Rayamajhi, and Regmi, 2015). Hiring and promotion decisions take account of the employee’s in-group and management is the management of groups.

Masculinity

A high score in masculine on this dimension means society is driven by competition, achievement and success. A low score means that society is driven by the dominant values and quality of life. Nepal scores 40. It means people of society are concerned about the quality of life, people value and equality. Conflicts are resolved by compromise and negotiation this culture helps to Danone to establish long-term relationship in society and helps employees believe in the quality of working.

Development Strategies for Expanding into International Market

Uncertainty Avoidance

This factor means how society deals with the unknown a fear of society. Nepal scores 40 in this segment. It means that aggression and emotions are shown in society (Beugelsdijk, Kostova and Roth, 2017). People accept new ideas, innovation and believe to try something new.  So for Danone, the business practice becomes easy and helps to expand its operations. People like to try new and different things.

Long-term Orientation

This dimension deals how society maintains its relations with past and face the future challenge. The society is divided into two parts i.e. normative and pragmatic approach. In the normative society, people prefer to maintain old-time tradition and norms. On the other hand, pragmatic society likes modern society. Currently, Nepal has no score in this category.

Indulgence  

One challenge of every society is socialization. It defines to the extent which one can control over its desire and impulses. Nepal has no score in this segment (Beugelsdijk, Maseland and Hoorn, 2015). It can be divided into two parts i.e. Indulgent or Restrained. The overall culture framework of Nepal is positive. This county is small in size but the opportunities are vast. In Nepal, there is another food company such as Nestle earning healthy revenue. The culture is diverse and appropriate for making long-term business.   

B Issues of cultural shock and solutions

The word culture shock refers to feelings of distress while exploring foreign culture. It is also the personal disorientation a person may feel when experiencing an unfamiliar way of life due to immigrations or visit to the new country. Danone is an international company that wants to expand its business in other countries (Gunn, 2017). Nepal and Malaysia both are emerging economy which can add more revenue. However, to start business certain issues always exist for which firm need to make an effective evaluation. There are many issues which are related to cultural shock some of them are given below:

• Due to cultural shock employee refuses to work with the company. Employees have different perception about workplace environment. If the culture of the new place is not healthy then employees turnover can increase which can lead more complexity in the firm (Brown, 2016). Danone is a French company, so if the firm wants to hire employees from different countries needs to maintain a healthy work environment.
• In the international business operation, HR has a critical role in the management of work environment. Due to culture differences, firms cannot achieve its goals. The gap between two cultures can make operations more complex. Business Corporation avoids making communication that results misunderstanding.

Solutions

Effective international human resource management

In order to prevent the above problems, Danone needs to make effective international human resource management. Firms need to make strategic alliances with different people and develop a cross-culture environment (Liu et al, 2017). Expatriate feels discomfort in a new environment which can be avoided by conducting formal meetings with employees. It helps to establish open communication with other people and employees can work as a team. 

Impact of Human Resources Management

Appropriate recruitment

The selection of future expatriate is a crucial process. Most of the international company failed to select an appropriate candidate for specific jobs (Sit, Mak, and Neill, 2017). Danone needs to select candidate profile which fits perfectly for the international assignment. Employees profile should be matched with cultural constraint and the host country.

Conclusion 

As entering in the new marketplace, the main problems for the HR are culture and communication gap. The market of Nepal and Malaysia is highly competitive and an emerging market. The culture of these two countries is also very informal and provides open communication. Value, beliefs, and preferences are different from each other which can lead complexities to achieve goals. From the above report, Danone should introduce effective international human resources management with its business environment. The firm needs to provide inter-cultural cross training development to the new employees. Culture training, language instruction, and assistance on the practical matters help to employees to make communication and reduce culture gap with host countries. Interpersonal skills consider as important skills for working in host countries. In addition, Danone can also give additional perks and financial aids to individual to motivate them. 

References

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Rayamajhi, K.B. and Regmi, M.P., 2015. Effect of individualistic and collectivistic values on total role stress among the government officers of Nepal. Global Journal of Human-Social Science Research.

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