The Impact Of Globalization On International HRM: Foxconn In China (essay).

Why multinational companies use Foxconn as a supplier

Question:

1. What is the impact of globalisation on International HRM? (50%)

 In answering this question you may find it useful to consider

a) Why have the multinational companies been using Foxconn as a supplier

b) What sort of HR strategy is adopted by Foxconn in China and why? 

 2: What are the HRM challenges faced by MNCs in their global operations? (50%)

In answering this question you may find it useful to consider

a)  What are the main HR issues identified in the Foxconn Case

b)  What further changes might be required in the current practices of Foxconn? What could help these changes to become a reality?

Globalization can be defined as the set of process that is complex in nature and operate very erratically in both space and time. The transnational corporations are focusing on their extensive operations geographically and also in states through their industry policies, foreign investment and trade which is supporting to reshape and shape their global economic map (Abrishami and Peivandi, 2012). Further, the revolutionary, time and technological changes in the production processes, transport and communication have facilitated the globalization and internationalization for production of both goods and services (Hunter and Katz, 2012). The changes in the external factors of the organization and also increase in various opportunities and innovation is enabling the companies to expand and extent their operations in the foreign market. Thus to adapt to the changing demand in the business operations due to globalization, the top management of the organizations are focusing on changing their business model, to gain market entry in the international markets and also operate effectively (Gachunga, 2009).

In this context, the essay will analyze the case of Foxconn in China. The essay will highlight the reason behind why most of MNCs choose Foxconn as their supplier presently and also discuss the current HR strategy adopted by Foxxconn in China to help the employees in meeting their needs. The essay will also demonstrate the HRM challenges faced by the multinational in operating globally and also discuss the HR issues that Foxxconn had to face.

Human Resource Management can be termed as the practices and policies that mainly emphasizes on carrying out different aspects of people including the training, screening, recruiting, appraising and rewarding(Ohtaki and Bucknall, 2005). However, it is too be noted that the key activities of the business remains same even if the country is working outside its domestic country but the scale and context of activities might change to emergence of globalization. There are three dimensions of International Human Resource Business: The first dimension involves the utilization and distribution of Human resources including the work relations, training, performance evaluation, salary and compensation, employee recruitment and selection and also pertinent planning. The second dimension mainly includes different countries that involve various internal activities related to human resource management. The third dimension is the different employee types working for the international organization like Host-Country Nationals (HCNs), Third-Country-Nationals (TCNs) and Parent-Country National (PCNs) (Maksimovic, 2003).

HR strategy adopted by Foxconn in China

Due to globalization, the expansion of international market has issues related to employees like acquainting and coordination with employees of different culture, the feeling of loss of identity, learning new international business rules etc. Human Resource management helps to deal with such differences. Human resource management plays a vital role in this globalization process. It helps to determine the fitness of cultural scale among the companies before finalizing the possible arrangement. This globalization process has led Foxconn improve its competence, teamwork and creativity(Almond, 2006).

Foxconn is the International Technological group from China which is engaged in electronic business contracts for manufacturing channel business, digital contents, automotive electronics, consumer electronics, telecommunication and computers. Presently, it is the largest Contracted Electronic Manufacturer (CEM) of the world. It has become the first choice supplier for most of the multinational corporations (LaPedus, 2010). The main reason behind this is Foxconn commits its clients to provide the best solution of IT products and services. The major clients are Japanese electronics, European and American companies. It has contracts with Toshiba, Sony, Samsung, Nokia, Nintendo, Motorola, Microsoft, Intel, Dell, Cisco, Apple, Acer and Amazon.com. America, Europe and Asia are the three designed and manufacturing zones where the design is implemented and assembled through vertical integration process, at high quality/low cost/ high efficiency/large scale (Pistono, 2012).

The vision of Foxconn is to make solace of electronic products use a feasible reality for all humankind; Through the restrictive one-quit shopping vertical coordinated e-cmms model to change the traditional wasteful gadgets outsourcing model; Through the commitment to more noteworthy social agreement and higher moral benchmarks to accomplish a win-win model for all stakeholders including shareholders, workers, group and administration. Foxconn prides itself on its dedication to having "on-time delivery and zero inventory” that increases the value of existing products, creates new product offerings, and beats rivalry to the business sector, and where reasonableness meets technological changes. Through its backups and subsidiaries around the world, Foxconn furnishes its clients with an "all-in-one service" and forefront IT products around the world.

The leadership of Foxconn is established on the premise of keeping up a steady concentrate on Component Module Move and Service (CMMS), a plan of action that was conceived by its CEO and founder, Terry Gou. Foxconn offers a phenomenal arrangement of capacities on the outline of segments and modules that empowers it to convey a one-stop solution to design, manufacturing, logistic, repair and maintenance worldwide. The five key fundamentals of the basic plan of action – cost-efficiency, flexibility, technology, quality and speed - have demonstrated sustainability of Foxconn that lies at the center of its journey for achievement (Management Association, Information Resources, 2012).

With its entrenched innovation on tooling and embellishment, Foxconn has advanced from being a maker to an imaginative innovation designer and to turning into the business pioneer in electronic, optical and mechanical integration. It is now trying to discovers another areas like heat transfer technology, networking systems, nanotechnology, green environmental technology, CAD/CAE, sputter technology, optical film, designing of networking chipset and SMT. The legacy of Foxconn reflects the list of priorities and core technologies that helped the organization to be the leading supplier: Foxconn applies its six "C" key competencies (content, car, channels, consumer electronics, communication and computer) and propelled technologies to address the various and complex issues confronting its clients. Its wide base of abilities likewise permits the Company to grow the frontiers of the seventh "C" (health care) and the eighth "C" (CSER investment). The organization stays focused on fortifying its position as a reasonable corporate national on a worldwide scale (foxconn.com, 2009).

HRM challenges faced by MNCs

The key HR strategy of Foxconn is to create trust, collaboration and openness in their work relationships through integrity, values and dignity. The HR policy of Foxconn focuses on value diversity, leveraging innovation where the employees of Foxconn can develop themselves and fulfill their potentials. “No Forced Labor” and “No Child Labor” are two most important policies that Foxconn strictly implements. The recruitment and selection policy of Foxconn focuses on hiring the best candidate and also prohibit discrimination with regards to disability, culture, religion, nationality, citizenship and political preference. To be the best employer in China, Foxconn implements the local hiring policy through presently in its manufacturing sites 99% of the employees are citizens of China.

Further, the living and working environment of Foxconn also contributes to success of HRM. The organization nurtures positive, invigorating and equal opportunity working environment. It offers individually-tailored salary and compensation packages that comprises of equity components, bonus and rewards. It encourages “active living at work” where employees get the opportunity to participate in various recreational activities like reading rooms, basket ball courts, gymnasiums etc. This policy helps to optimize the work-life balance and also incorporate the social and health practices in daily working patterns.

Foxconn conducts employee performance appraisal process annually to assess the performance of their employees and give them a chance to improve based on their performance outcome. It hosts various award ceremonies to honor the best performance employees. The organization also makes sure the safety and healthy environment for employees. To ensure good health of the employees, the organization has implemented testing machines, safety regulations and also conducts health related activities and made employees to have access to health education (Price, 2004). Foxconn also believes that effective training and development helps to improve the skills and capabilities of the employees. It also motivates the employees to enhance their skills which contribute towards creation of positive working environment. Thus Foxconn facilitates classroom based training along with off-site, on-site and e-learning sessions. This facilitates the employees to attend after-hour seminars and training sessions (Laird, Naquin and Holton, 2003). Finally, for welfare of employees, Foxconn had established Labor Union which works for the protection of workers. The primary duties of The Foxconn Labor Union are to strengthen the ability and cognitive skills of employees, to guide in management and corporate growth, to encourage union democracy and lastly to protect the legal rights and interest of the employees. These functions help the organization to lead the market of China and to sustain in this competitive market. Through these strategies Foxconn emerges as a market leader in its business stream (Jacobsen and Skillman, 2004).

However, even after implementing the best strategies, the MNCs are facing huge challenge while operating in international market. Due to globalization there is an increase in the business internalization. This is creating a great impact on the MNCs while operating globally like unfamiliar work ethics, management styles, competitions, practices, languages, laws etc. The HR managers of the MNCs are finding difficulty in dealing with heterogeneous functions. They are also facing issues in managing the workforce diversity and also unfamiliar ways of doing business, customer needs thus creating a big issue in integrating the share global working values with the diverse value system.

Main HR issues identified in the Foxconn Case

Similarly, Foxconn also faced some HR issues while operating in China. The recent suicidal news at Foxconn has raised various questions against the HR policy of the organization. In the year 2010, 10 employees had committed suicide to avoid ghastly and long working hours. 150 workers protested against the working condition of the organization. Further in the year 2011, 18 employees were injured and 4 were dead due to explosion in the factory. These all led to unprecedented challenges in the organization (Integrity HR, Inc., 2012).

Analyzing the fact, it can be said that Foxconn operated on 3 key principles discipline, control and authority which created mental pressure for the employees working in the plants. Since Foxconn mainly emphasized on delivering the best to its clients to beat the competition, there was high physical and mental work pressure on the employees leading no work-life balance. Further, there was huge income gap for the employees working in Foxconn. They felt unfair towards their effort they put in and also felt low in status in the society. Altogether, Foxconn had to face a huge challenge with suicide, self-injury and unexpected death (Guo et al., 2012; (Srivastava and Agarwal, 2012; Kapoor, n.d.).. In coming future, Foxconn can also face challenge for working in China as it is no longer a cheap place to outsource services or manufacture goods. Cost is increasing in China making it as an expensive place to do business (kpmg.com, 2012).

To overcome all these issues, Foxconn need to develop a HR framework that would help to maintain sustainability through HR activities. Foxconn need to appoint an HR officer who would be responsible for reviewing all the core functions of HR relating with the organizational culture, employee rights, recruitment, training and development, salary and compensation etc. The process should involve alignment of HR infrastructure with the sustainability ways. Throughout the process, the HR officer should use the metric based tool that would help to measure the sustainability performance. Foxconn should ensure that the HR department of the organization is following a broad roadmap (shown below) for high business outcomes (Cohen, Taylor and Muller-Camen, 2011).

In conclusion, this essay demonstrates the impact of globalization on HRM practices with respect to Foxconn Group. The essay identifies the HR issues and challenges that the organization faced in recent years and what are the recent HR strategies that the organization is following presently to sustain in the market of China. The essay found that Foxconn have implemented various strategies related to training and development, recruitment and selection policy, the labor union, performance management, working and living environment, everything has helped the organization to lead ahead in the Chinese market. The recent suicides and injuries have made the management to take proper steps for better life of the employees.

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