1Outsourcing an MNC Part IIOutsourcing an MNCPart IIStrayer UniversityStudent: Oliver J SalazarInstr

1Outsourcing an MNC Part IIOutsourcing an MNCPart IIStrayer UniversityStudent: Oliver J SalazarInstructor Name: Dr. Chebe, Emmanuel NFundamentals of Global Management ITB 3000May 23, 2016Current culture of China and ability of Walmart to manage diversity.2Outsourcing an MNC Part IIThe country selected for the assignment is the People’s Republic of china owing to itsstrong technological base, high and growing population which offers market for consumerproducts. Accessibility plays a role too as the People’s Republic of china can be accessed viathe Pacific Ocean which contributes to its status as a major market foreign direct investment.China is able to manage multiculturalism well since it is not overly rooted in religiouspractices and myths which tend to promote local associations over international ones. Theseare not prevalent in the People’s Republic of china and thus making the country attractive forinvestors, direct as well as indirect investors.The People’s Republic of china adopted globalization at an early stage; hence theeconomy system policies and regulations are advanced. According to Hofstede the People’sRepublic of china appreciates that individuals in society are not equal based on the highscores on power distance. This encourages foreign investment as it is an indication that thecountry recognises and embraces capitalism which is the global status quo at present (Raza,2013).The Chinese people prefer to work in their individualistic capacities rather thancommunal or group. Additionally, Chinese people have a higher score on the long termorientation which deals with individuals maintaining links with the past to address presentand future challenges. This means that the Chinese culture has a lower value for past indetermining their current and future state of affairs thus fostering innovativeness.Walmart certainly has the ability to manage both multiculturalism and diversity asevidenced through its global markets strategy. It has successfully operated in the globalmarkets and is still doing so. This suggests an understanding of multiculturalism anddiversity. As of 2015, the company had 40% of its workforce comprised of people withcolour and 30% of management was with people of colour. The further substantiate this, the3Outsourcing an MNC Part IIUnited States workforce of Walmart is approximately 784000 people, 279000 are AfricanAmerican, 185000 are Hispanic and 48000 are Asians. This means that the company isalready diverse from within which is a big bonus.Analysis of the four (4) basic strategies for global integration and recommendation forWalmart.The multi-domestic strategy is an approach where companies specialise in achievingmaximum local responsiveness by customising both their product offerings and marketstrategy to match various national conditions. It encompasses terms such as globalisationwhich is the globalisation of brands while staying true to local customs and preferences. Toachieve this effectively, research and development as well as production and marketing areusually established in each major national market where business is done.Global strategy is an approach that aims to establish a business on the global scene byanalysing the major markets for various elements (Luthans, 2015). The products are marketedvia the employment of the same co-ordinated image and brand in every market. It allowsfirms to sell standardised products globally without much need for region specificcustomisation. However fixed costs can be substantial here due in part to the lack ofdecentralisation. One cooperate office is usually responsible for the global strategy. The headoffice is responsible for virtually every co-ordination task.Transnational strategy involves conducting businesses in several countries whileexercising various degrees of co-ordination and integration of strategy and operations.Different world markets are explored and the feedback used in designing responsiveorganisational structures and creating value added activities which help in exploiting nationalsimilarities and differences. The firms can use their international brands or create locallyspecialised brands for the various regions. In a nutshell, are complex organisations with in4Outsourcing an MNC Part IIforeign countries. They have a centralised management system but may delegate research anddevelopment, marketing and some level of decision making to each individual internationalmarket.The international business strategies are basically guidelines for governing a businesswhile conducting commercial transitions with businesses outside its home country. As suchseveral companies with large scale operations tend to have a form of International businessstrategy provided they deal with international partners. In a nutshell, international businesscompanies are usually importers and exporters without investments outside their homecountryThe transnational strategy is recommended for Walmart in this venture as it ensuresthat the company can outsource its research and development among other elements whileexercising various degrees of co-ordination and integration of strategy and operations. Thestrategy has provisions of going local on the brand or retaining the global brand and the levelof delegation can be checked to ensure proper integration. These aspects are important forthis venture.Environmental scanning analysis and forecast in China.Environmental scanning analysis is an essential component of global environmentalanalysis. The global environment here entails macro environment and the macroenvironment.The macro environment comprises;MarketsIndustriesCompaniesClients andCompetitors5Outsourcing an MNC Part IIThe micro environment comprises;CustomersSuppliers andCompetitorsEnvironmental scanning studies and attempts to interpret economic, political, technologicaland social events as well as trends that have an impact on the various business and businessmodels.as such this is an on-going process as opposed to a one time affair (Cascio, 2012). Itspurpose is to help the organisation to be aware of what the business environment is like andmake appropriate decisions such as adapting or opting out.The sources of information for this study are verbal sources, journals, books, the internet andnewspapers among several.The following steps are used in this case for the scanning;Analysis of issues that necessitate environmental scans which in this case isthe intention of Walmart to outsource in chinaInformation gathering is done so that the needs of the organisation aretranslated into required pieces of information that would be useful in theprocess.The information is analysed and trends establishedThe results from the analysis are communicated to managementManagement make informed decisionsIn the case of China this analysis has been done already and highlighted throughoutthe text. The People’s Republic of china has a strong technological base and a high andgrowing population which offers market for consumer products. Accessibility plays a role tooas the People’s Republic of china can be accessed via the Pacific Ocean which contributes toits status as a major market foreign direct investment. China is able to managemulticulturalism well since it is not overly rooted in religious practices and myths which tend6Outsourcing an MNC Part IIto promote local associations over international ones (Salazar, 2013). These are not prevalentin the People’s Republic of china and thus making the country attractive for investors, directas well as indirect investors. The country adopted globalization at an early stage; hence theeconomy system policies and regulations are advanced. According to Hofstede the People’sRepublic of china appreciates that individuals in society are not equal based on the highscores on power distance. This encourages foreign investment as it is an indication that thecountry recognises and embraces capitalism which is the global status quo at present.In addition, the Chinese people prefer to work in their individualistic capacities ratherthan communal or group. Additionally, Chinese people have a higher score on the long termorientation which deals with individuals maintaining links with the past to address presentand future challenges. This means that the Chinese culture has a lower value for past indetermining their current and future state of affairs thus fostering innovativeness (Artiz,2014).The political atmosphere in the People’s Republic of china is a bit tricky. The Chinesegovernment is not trusting. It has stringent rules that allow the government to pry into foreigncompanies that it suspects are undermining the government. It monitors internet traffic forpossible threats and thus it is potentially hostile to individuals and corporations alike.It is important to mention that the Chinese industry is filled with counterfeit productsand dubious agencies thus Walmart has to put this into consideration when making thedecision to invest.Several large corporations in the country are state owned and thus the company has toconsider this factor when making a decision on what partner to get.With regards to this Walmart should endeavour to join the market with an informedperspective. There are pros and cons. However the fast growth rate and technological prowess7Outsourcing an MNC Part IIof the People’s Republic of china outweighs the cons. The cons can be worked aroundthrough levels of delegation and proper compliance with the laws and regulations.Based on the environmental analysis, recommend both an ownership structure andorganizational structure for operating the MNC within the new market. Defend yourrecommendation.I would recommend a horizontal structure where employees are able to deal withseveral managers and move things fast as opposed to bureaucracy. The decentralisedapproach ensures that when one manager is compromised the others can proceed and thusensure operations are on-going. Beside, with a new environment it is important to haveseveral managers and that decision making is consultative and thus likely to be appropriate.Political risk analysis of macro and micro risks and indigenization laws for ChinaThe political risks associated with the new location are internet censorship, the one childpolicy, industry regulations favouring Chinese employees and companies.Internet censorship is a risk since it exposes potentially sensitive companycorrespondence and can be used by official unscrupulously to give other companiesadvantage. This can be devastating on Walmart as leaking trade secrets can result inexpensive lawsuits and potential loss of consumer base due to counterfeiting of their productsby the culprits. This can be mitigated by using encryption software.The one child policy is affecting the Chinese economy as the elderly age and retires.They represent a burden to the youth and thus the economy can be hostile in that sense.Walmart may have to pay its Chinese employee more to mitigate these conditions and havethem work optimally. Happy employees are likely to be productive.8Outsourcing an MNC Part IIImplementation strategy, challenges and opportunities to forming mutually beneficialrelationships.The implementation strategy would be along the guideline of the 4p’s. These areprice, production, promotion and place. It is important to set the correct pricing for theoutsourced services so as to be competitive in the market. These can be made easy throughpartnerships with firms such as china clean energy so that it could benefit from somehandholding in the new environment. Production in the outsourced market should bemonitored to ensure that the costs are manageable and sustainable. Promotion could be donein conjunction with china clean energy since it already is familiar with the marketdemographics. Place is important is It determines aspects such as accessibility and proximityto labour. It would be advisable to employ and existing network and position the offices andplants alongside china clean energy for a start till the company gets a hang of the market.9Outsourcing an MNC Part IIReferencesArtiz, J., & Walker, R. C. (2014). Leadership styles in multicultural groups: Americans andEast Asian working together. Journal of Business. 51(1), 72-92.Cascio, W. (2012). Methodological issues in international HR management research.International Journal of Human Resource Management. 23(12), 2532-2545.Luthans, F., & Doh, J. P. (2015). International management: Culture, strategy, and behavior(9th ed.). New York, NY: McGraw-Hill.Raza, A., & Muhammad, R. (2013). Determinants of business ethics on multinational andlocalorganizations. Journal of Business Studies Quarterly, 4(4), 47-55.Salazar, R. J., & Wang, J. (2013). The evolution of Strategies: Multinational Subsidiariesoperating in China. Journal of Applied Business Research. 29(5), 1261-1280.