Executive Summary
Globalisation of trade continues to gain momentum all over the world. As a result, international companies remain steadfast in their quest to enjoy competitive advantage over their rivals across the globe. Such desires create a suitable avenue for mergers and take-over in the business sector. Mergers play significant roles in consolidating the customer base of the companies involved, while take-over translates to the control of customer bases of the dissolved companies.
This emerging trend among multinational firms comes with great challenges and experiences, such that if proper execution of the program fails, the businesses involved may incur great losses. This paper seeks to analyse various emerging issues that arise from the joint venture between Harrods (UK) and Emaar Properties (UAE). Harrods is departmental store in the UK providing a wide range of products and services, while Emaar is a business franchise running several shopping malls and shopping joints in the UAE. In addition, the paper seeks to develop the best human resource development and management strategy for the joint venture.
Introduction
Mergers come with great benefits in the human resource segment of company management. The resulting company that come into place after a merger obtain quality staff and additional staff with great array of expertise in the industry, thus increasing chances of productivity. Similarly, mergers come with diversification of products to the customers. This acts a customer base maintenance since wide variety products and services increases the number of consumers gaining services from the new entity.
In the diversification segment, mergers offer more space new target acquisition, thus producing a new ground for the new entity to access markets that the previous merger institutions failed to access (Torrington et al. 2011). Corporations continue to engage in mergers and acquisitions as a fast rising strategy for enhancing competitive advantage in order to increase the chances of maintaining relevance in the dynamic market. However, these mergers come with great challenges especially when executed across regional borders. The national, regional, cultural, as well as institutional strategies need harmonisation to ensure successful cooperation.
Emaar Group
Since inception in 1997, the company continues to shape landscapes and lifestyles of several individuals in the UAE. With a mission to transforms the shopping systems in UAE into one stop entities, Emaar provides global real estate solutions in home services, work, plays, retail chains, educations as well as industries. Some of the most outstanding outputs of Emaar include Burj Khalifa, the worldâs tallest building and Dubai Mall, worldâs largest shopping and entertainment centre among others.
With interest in hotel, leisure, shopping, and entertainment joints, the company adopts adequate strategy in business plans engaging in a wide variety of service provision to spread risks and increase profit margins (Mission, Vision, Strategy & Values n.d.). Increased growth within the company necessitates decisions to explore the international market with mergers and partnerships across the world.
Harrods Group
Started in 1824, the Harrods Group provides a wide range of products and services through subsidiaries in banking, estate management, and aviation. Harrods chain store boasts of more than 300 departments offering clothing, electronics, toys, foods and other consumables, stationery, furniture among other household products (Strategy and Values at Harrods n.d). The chain store also runs restaurants and leisure joints for the shoppers with specialised faculties for customers with children.
With the mission to become worldâs number one departmental store for sophisticated merchandise, the shop strives to maintain the world admiration and respect as it provides services to the customers. Harrods ensure adequate strategy to achieve its mission by confining the workforce to the strict core values of maintaining the British heritage, ensuring luxury, innovation among the workforce, and adequate service delivery.
Pestle Analysis of UAE Business Factors
Political factors
Politics play a vital role in policy formulation and legislation of laws with direct bearing on the multinational businesses. Some of the greatest policies within the UAE include the Emiratisation of the workforce. In this program, the government developed a quota system responsible for ensuring the local population received high workforce percentage within the international companies establishing business within the countryâs jurisdiction.
On the same note, the retailers must develop viable ways of utilising lower-paid and local based human resources as well the highly skilled higher paid workforce. The program also puts into place tiers in the job descriptions from the low-level inexperienced students, disabled workers as well as the elderly workers. These factors ensure that the productivity of the workforce remains rewarded based on the productivity (Balchin 1994).
Economic factors
Economic factors and policies influence demands, costs, and prices of goods and services. Unemployment rates decreases the effective demand for many good thus reducing the demand required to produce such goods (Torrington et al. 2011). In order to gain from establishment of international companies, economic policies within the UAE ensures proper mechanism in job distribution within local population with at least 51% of employees of any organisation coming from within the nation. This policy seeks to ensure that the local workforce remains engaged in the production sector resulting to high level of purchasing power. This translates to high demand for goods and services leading to growth (Alexandrides 1973).
Social factors
Customer shopping trends in the UAE continues to change slowly to âone-stopâ and âbulkâ shopping. For this reason, Emaar chains shifted to variety displays across the chain stores. Wider range of products available in the shelves ensures that the customers have the ability to get all the need in one chain store. Harrods on the other involved the great use of technology by the consumers.
Customers frequently made their orders from the homes thus charging the company with the responsibility of sorting and delivery. Understanding these two dynamics to come up with a âone-stopâ shop as well as incorporating technology in the process is necessary to ensure the competitive advantage needed in the new venture.
Cultural factors
UAE as a country continue to embrace the role of the women in the service industry. Contrary to most Arab nations in which women play little role in the management, the country is slowly enabling women to take up management roles both in the private and the public sector. Emaar, as the native and entry point of the new entity point to market for the new venture already boasts of great number of women employees. Even though Harrods hails from a country with advanced gender empowerment, it must understand that the UAE is undergoing a transformational period in which women are getting the opportunities to serve in the management positions of different business.
National issues
Demographic dynamics such as the elderly and increased women workers create an opportunity for the chain distributor to provide more services and products as more women venture into shopping (Torrington et al. 2011). Since women in UAE for a long time have remained in the nest-fending and home making activities, the shopping culture in the UAE generally remain a woman-affair.
For this reason, the Harrods employees moving into the new systems must get enlightened on the national shopping trends in the country. Product and services within the shelves must consider the percentage of the gender attraction since most people going shopping in the UAE remain women.
Technological factors
Advancement in technology and globalisation of trade trends greatly influences growth and development of international companies. Consumers enjoy more personalised and convenient service such as online shopping and use of electronic money transfer services while the traders presents the services with low cost reducing production expenses. UAE is no exception. The country embraces technology in the provision of product and services.
Similarly, the availability of information on the trending products and service in the company websites enables consumers to carry out a background check on the needs in the internet before setting out for physical shopping. The adoption of electronic points of sales and funds transfer systems continues to revolutionise the sales volumes of international companies. Use of electronic scanners improves efficiency in distributions and stocking of the product and services with the suppliers getting orders in real times (Finch 2004).
Environmental factors
Environmental sustainability plays an important role in ensuring sustainable productivity in both manufacturing and industrial sectors (Tracey 1994). Natural resource base form the backbone of many production units with inputs coming from Mother Nature. UAE annual budget receives funding from the natural resources. The oil fields play a vital role in economic development of the country.
However, if the exploitation trends go unchecked, the wells stand chances of depletion leading to an economic turmoil. To counteract the problems associated with oil extraction and the environmental degradation caused, several multinational companies continue to develop environmental policies to ensure their products and services helps in the reducing the environmental degradation trends.
Legislative factors
Government policies, frameworks, and formulations have great influence on the business of multinational companies (Johnson & Scholes 2003). Government set out regulation relating to the production free zones as well as the minimum wages. Similarly, the government is responsible for imposition of tax and duties charged on business involved in the international trade. In the UAE, it is government policy for all international entity venturing locally in representative or branch capacity to reserve at least 51% of the employment opportunities to local residents.
Human resource management and organisation performance
Recruitment and selection
This forms the basic role of the human resource department of any organisation. In this role, the HR managers develop plans and strategies for hiring the most productive employees in line with the local regulations. For the new entity in UAE, 51% of the employment opportunities remained reserved for the local resident. In order to keep up with the rising need for dynamism in the production sector, this department is responsible for training of the employees on the emerging production trends that suit the customers (Scullion & Collings 2006).
Munro-Fraser System of recruitment
Impact on others physical make up
In this segment, the resultant organisation must put into consideration the intervieweeâs appearance, speech, and manner. Inasmuch as the UAE remains liberal on dressing code of the local employees, necessary measures are necessary to assess the makeup behaviours of the recruits to ensure they are in line with the Muslim culture (Aberg & Diane 2004).
Acquired education standards
This section of the model assesses the academic and professional qualification of the employees. As a business, venturing into a relatively new setting under new structure the system the HR must develop ways of recruiting people with experience in multi business management within the UAE. Such an experience brings forth the understanding of the local regulation and business culture.
Innate abilities
A system of aptitude and psychometric tests are necessary to evaluate the quickness of comprehension and abilities to learn under duress. Such qualities are necessary in UAE environments since the new entity stands chances of facing great challenges and local rejections if proper marketing fails.
Motivation individual goals
UAE slowly generates stiff competition within the markets. International companies continue to explore her markets due to relatively low restriction and tax. In order achieve a competitive advantage over the rivals, HR in the new entity must develop ways of recruiting highly ambitious individual with wide experiences in specific goal realisation.
Adjustment and emotional stability
The UAE is a country with great multicultural work force due to the friendly business culture within the country. Despite these diversities providing a base for success due to various experiences and culture needs, it brings stress and conflicts in management. This segment of recruitment ensures employees of the new entity possess the ability to stand stress and engage with people from different cultural backgrounds.
Training and Development
Training and development of the workforce provides measures of optimising utilisation of work force (Lawrence & Weber 2014). It provides employees with opportunity to achieve individual and organisationâs goals. Development also helps the employees in career development especially on the technical and behavioural skills earned at work environments.
ASK model of training
The AKS model of training and development revolve around three segments namely, attitude of employees towards the job description, skills required for the job such as listening, observing and feedback, and prior knowledge (Torrington et al. 2011). This model generally uses peer learning and development systems in which experienced employees get time to share their experiences in the work force environment with the amateur employees.
The inexperienced employees receive adequate audience from the experienced peer on the necessary skills and knowledge necessary in production. To execute this program, the local entity employees with vast experience in business management within the UAE must engage in educative segment with the new recruits. Seeking and external expert in employee development in the business field is a good avenue to explore (Fitch & Semb 1993).
Rewards Strategy
Theory of reward systems
Armstrong and Stephens (2005) argue that as competition increases, the need for companies to adjust the business strategies to remain competitive rises. In order to maintain the competitive advantage in the market, employers seek to recruit and maintain the best work force available. In order to manage this, the employers engage in a series of rewards and motivation to employees for their exemplary performance as a way of ensuring employees remains in the organisation.
In this system, rewards cover a wide range of payment such as base compensation, bonuses, stock options, and cash, among others. Rewards theory ensures that managers reward employees in order to ensure they maintain a given behaviour in production. Most often, employees receive incentive according to the values appreciated by organisation as well as the values the employees adds to the organisation (Marchington & Wilkinson 2008).
Rewards and emoluments help build adequate employee engagement strategies necessary for long-term business goals. Equitable salaries and recognition for exemplary performance among the employees are some of the tools used for rewarding employees. These tools help in staff motivation towards hard work and achievement of goals within the entity.
The new entity must adhere to the minimum wage regulation set by the UAE government in the payment of the low-cadre employees. On the payment systems, the new entity should define the payment to the employees based on their experiences and skills as presented in their curriculum vitas and presentation during the recruitment process. Systems based only on skills have chances of failure since the entity has little experience on the business culture and behaviours in the UAE.
Employee Engagement
Employee engagement and involvement in work place decision-making ensure commitment to the business entity. It also increases the employeesâ motivation towards an organisationâs goals and mission. When the HR engages the employees, they enhance their self-esteem leading to realisation of individual goals, which later translate to companyâs goals and objectives. Proper rewards, healthy working condition, adequate work-life balance ensure that employees feel appreciated (Torrington et al. 2011). The resulting entity must put in place proper measures to ensure these systems exist.
Appreciating the Differences
Harrods and Emaar come from different set ups influenced by different strategies and policies. Acknowledging these differences helps the new entity to improve service delivery and product provision. Such appreciation enables the new business franchise to develop a strategy to maximise production with these diversities. The rationale in this strategy aims not only to target the operational strategies of harnessing the work force, but also seeks to identify and evaluate the uniqueness of each of the workforce from the previous entities.
Chawla & Renesch (1995) argue that for these two organisations, the disparities exist in value systems and corporate culture, leadership structures and organ grams, staff skill levels and qualifications thus steps to maintain productivity modules while ensuring an ample platform for homogeneity will allow the organisations to leverage each other and boost the production levels.
Knowing the People
Developing a strategy to understand identify and understand the key stakeholders in the new entity is necessary. Given UAEâs systems of instituting a company locally, the new entity must engage understand the legislative controls, local workforce behaviour, and organisational culture. Similarly, creating an integration team drawn from the diverse function of the previous entities is critical in the overall supervision and oversight of the merger process.
Such a team ensures the construction and tracing of integration process within the set timelines until the completion of all the post-merger arrangements (Harzing & Ruysseveldt 2004). Rapid restricting of the new organisation and identification of proper priorities is necessary to ensure the middle level management keeps to the pace of market demands.
Global approaches in human resource management:
Outsourcing
Noe in his work on management denotes that outsourcing allows business enterprises to focus on other issues in the management while having the employment and human resource management systems run by external experts (2012). For this reason, the burden of resources and attention that might fall managing the human resource passes to experts in human resource management and recruitment.
The cost and expenses that would otherwise arise from the management engaging in the recruitment and management of the human resource thus gets diversion to more essential and broader issues within the business enterprise. Even though outsourcing eliminates the direct contact and communication between the business franchise employees and the customers, it provides a necessary mechanism of cutting production costs.
Temporary human resource
Increasing need for employee to develop more flexible job opportunities creates the basis for this new system of human resource management. The use of contracts in employee engagement allows the business enterprise to make maximum and best use of the employee expertise within the short periods of engagement given the flexibility of the work conditions.
This augurs well with the current market cycles in which production and purchase of product and service tremendously changes with seasons of the year. The resulting advantage of this type of employments is the ability of firms to employ only a required number of employees at a given time depending on the market needs contrary to the permanent employment systems in which firms pay all employees even during low productivity seasons (Noe 2012).
Leasing human resource
In this kind of human resource management, an enterprise transfers its employees to another firm that specialises in human resource management, payroll accounting, and risk management (Truss & Mankin 2012). The entity that transfers its employees leases their human resource back as employees of the leasing firm.
The resulting effect on this system is the rise in payment in cases the firm wants to hire the services of the transferred work force. This system of human resource management is a way for enterprises to provide a body of highly skilled and well trained human resource that is capable of expanding in relations to the demands of the current world of production.
Issues influencing development and implementation of HRM strategy
Business growth is important in maintaining the dynamics, viability, and value-promotion of the product and services of any entity. A growth-focused organisation is capable of attracting and retaining the best customer base. As Goetz and Watkins (2008) denote, business growth lead to increased profits thus increases the shareholding values.
In order to increase the chances of achieving this, firm continues to engage in mergers and acquisitions as a fast rising strategy for enhancing competitive advantage. However, these mergers come with great challenges especially when executed across regional borders. The national, regional, cultural, as well as institutional strategies need harmonisation to ensure successful mergers.
Structuring and licensing
In spite of offering several free zones for transnational commerce to engage its local market, global entities with the aim of entering the UAEâs market must register a branch or enter into partnership with local business. This is a requirement under the company law. This means that Harrods stands a better chance of gaining entry into the UAE markets due to the partnership it enjoys with Emaar, a local entity within UAE. It is important to note local entities, in this case Emaar Group, must hold at least 51% of the shares in the business franchise as stipulated by the companies in the UAE.
Tax
UAE is proud of the liberalised market structures on international business. The country desists from levying federal and income tax on international business apart from those engage in the banking sector. The free zone business structures offered for international companies are subject to several tax concessions further improving the ability of the international companies to venture into the local markets. In this kind of environment, Harrods groups experience few hurdles in venturing into the UAE markets with the help of Emaar.
Law enforcement systems
Law enforcement strategies in UAE are strict. Government agencies controls and supervise carrying, consumption, buying, and selling of drugs. In this case, Harrods employees seeking residence in the UAE must declare their drugs at the airport. Contravention to this law results into incarceration, deportation, or heavy fines (Goetz & Watkins 2008).
Even though Dubai remains relatively moderate on religious issues, foreign employees must remain sensitive to the Muslim standards of dressing and behaviour. Employees from UK and other western nations find this conservative but must adherer to the regulations to avoid confrontation from the law enforcement agencies. It is important for the visiting employees to understand the Dubai code of conduct to ensure successful residence devoid of unlawful behaviours.
Organisational Culture
In the UAE, families own and run most local business and franchises. For this reason, chances of finding members of one family composing the directorate of an organisation are high. The local populations have intrinsic family values and always strive to keep the business within the familyâs grasp. The older members of the families take up the most senior position in the entity while the young members take up the middle level and low-level sector. It is important to note that the top most management position occupied by the old members of a given family acts as the sole decision making entity within the business. There exists a developed system of hierarchy in which management identify apparent heir and train them on the business management skills.
Even though these systems seem to expose the local businesses into acts of nepotism and deny them the opportunity to acquire productive workforce, Emaar engages in a process of competitive employment with intensive recruitment processes. Harrods on the other hand recruits the workforce and compel the employee into intensive training and development to ensure that they remain productive (Goetz & Watkins 2008).
Combinations of these factors provide an avenue for the acquisition of the best productive workforce within the new entity. Despite the fact that several local citizens with the inclination towards nepotism as depicted in most family based companies coming to seek favours, adequate recruitment systems are necessary to ensure a productive workforce.
Conclusion
From the report, it is significant to note that formation of a new venture involves numerous logistic, especially if the two firms are in different countries. In the case of Harrods and Emaar Properties, the entire management must adjust to the new business environment in the UAE. Organisational culture and consumer behaviours in the two firms have been different. For successful operations of the joint venture, harmonisation of the management systems is unavoidable. Harmonising the recruitment and selection process, as well as the performance appraisal between the partners is a way of ensuring success of the partnership.
Recommendation
Putting in account employeesâ needs during this crucial transition stage is necessary. The HR team of the new venture must develop viable ways of maintaining the productive employee base against all the insecurities that arise from the merger. Instilling discipline, rewarding hardworking employees, and employee development mechanisms are necessary for the success of this merger. Proper conflict resolution strategies are paramount since employees in the new set up come from different cultural backgrounds. If all these factors take priority in the human resource management roles, the success of the new entity becomes inevitable.
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