In order to develop the most effective international human resources strategies for Wal-Mart, it is important to understand the company’s competitive advantages. Since its inception, Wal-Mart has been founded on creation ingenious exploitation of the strategic advantages. According to Farhooomand (2006), the company’s success is dependent upon a unique combination of strategy and culture, aggressive price/cost reductions, small towns, supplier partnerships, and an unrivalled distribution network (logistical support). The company has acceptably human resources strategies in the United States, characterized by fairly good compensation (profit-sharing model, personnel empowerment, upward mobility and an egalitarian culture). However, the company appears to ignore the importance ensuring local relevancy Its foreign investments. The failure in Germany could be in part because of the regulatory and cultural factors that are different from that of the United States. This is emphasized by the fact that Wal-Mart has previously been successful in both Mexico and the United Kingdon, which have socioeconomically and culturally close to the US.
Effectively, Wal-Mart’s failure in China, Germany and other countries that are culturally distance from the United States stems from the company’s attempt to impose itsUS model on these countries. Multinational organizations such as Wal-Mart operate across multiple cultures, legal and economic structures, unique historical backgrounds among other factors, which have a direct bearing on the nature of organizations and effectiveness of strategies employed by them. For instance, according to Hofstede’s cultural dimensions theory, cultures differ from one another along several key dimensions. The dimensions include the cultures approach to masculinity, individualism, power distance and short/long-term goal orientation among others. The culture influences the organizational structure, job satisfaction, motivation, compensation structures, leadership models, communication and the respective regulatory framework. Wal-Mart failure to take this factors into consideration is the main reason for its failure. Farhooomand (2006) observes that localized demand and supply in China gave domestic players a competitive advantage over multinationals.
The most effective human resources strategy must always seek to blend the expatriates with local human capital/labour. The expatriates make sure that Wal-mart retains its organizational culture and practices, besides providing a linkage with the head office, but the actual running of business must be trusted into the hands of locals. Local human capital has an intimate understanding of the market needs and thus they are best positioned to meet them, compared to expatriate labour force. The control/coordination strategies, as well as the level of integration between the headqurters and subsidiearies, should also be influenced by the local environmental factors. Effectively, the operational and strategic policy formulation must be the responsibility of the local staff. In markets with wide national economic, cultural and political differences with the United States, then low integration is advised, in the way that high integration would be application for markets such as Mexico and the UK.
Ultimately, however, the success of any organization is dependent on the organization’s internal factors, including the organizational culture (which includes leadership, structure, communication, performance appraisal and channels etc), hygiene factors and technology among others. Effectively human resources policies among multinational must benchmark their practices agaisnt the most competitive practices in the country in order to ensure that they are not only competitive, but also that they do not distort the local markets. Competitive conditions ensure that the company can attract and retain the best talents on the market, which in turn makes for better performance.
Wal-Mart must apply similarly competitive compensation structures, knowledge management practices, work-life balance, performance appraisal and reward mechanisms, working conditions and other factors as successful Chinese firms and multinationals operation in the same country. Further, all effective HR policies must inculcate a measure of human capital development if it has to be successful in attracting and retaining the best talents. Human capital development practices may include training, development of clear succession plans, employee career develop, on-the-job training and the provision of educational grants among others. Local employees need training on Wal-Mart’s core culture and practices while expats need training on the Chinese culture and business environments among other factors. The company’s focus must move away from duplicating the US model, and instead leveraging the local human capital to create new business models that are best suited to thrive in their respective markets. A human resource management strategy would ensure there is a healthy balance between Wal-mart’s traditional business model, and the models that emerge in other markets.
Wal-Mart’s struggling performance in China, Germany and other foreign markets may have resulted from the fact that the company is stripped of its unrivalled distribution network, which has allowed it to maintain a grip over the US. However, the company’s failure to maintain its local relevance strategy is a major determinant. From its outset, Wal-Mart thrived because of its ability to identify and cater to the specific customer needs, including lower prices, convenient store location, provision of excellent quality and customer support. With an optimal international human resource strategy that strikes a proper balance between expatriate and local labour, the company should be capable of reproducing similar competitive advantages in China and elsewhere.
References
Farhooomand, A. (2006). Walmart Stores: "Everyday's Low Prices" In China. Taipei: Asia case Research Center.
Luger, E. (2009). Hofsteede's Cultural Dimensions. Boston: GRIN Verlag.
Rugman, A. M., & Collinson, S. (2012). International Business (6th Ed). London: Pearson Education.
