Evaluating the viability of Primark subsidiary in the Far East

1.    Introduction

For multinational companies who are looking to expand at a global level, the scarcity of qualified managers is becoming a critical constraint. Societies have become knowledge-based, and there is constant societal pressure on the emerging companies. Due to these facts, multinational corporations have realized the importance of human resource now more than ever. They have understood that human intellectual assets are as important as financial assets and it has now been given a prominent position on the priority list. Companies which are newly globalizing their business are constantly looking for trustworthy and savvy managers to handle their subsidiaries. However, it is one of the biggest challenges to find the right people at the right place and the right time for a job.

Another challenge faced by multinational corporations is keeping the performance of the workforce up consistently. In order to do these many companies use competencies. Competencies are integrated skills, attributes, knowledge and judgment that are needed by people to do a job in an effective manner. Each business should have a set of competencies defined in order to let their workers know what kind of work is required from them. If personal performance is linked to the organizational performance, then not only will the workforce of that organization become more effective and efficient but also the business will get many other benefits from it.

The fast fashion industry is ruling the United States market these days, and it is obvious that Primark wants to be a part of this race. Primark was found in 1969 on Irish land. However, the company earned its true name is the last decade where it proved that it could capture huge profits regardless of how the global economy is performing. Primark is also known to be doing full-blown CSR activities. They banned sandblasting in 2012 due to health risks. In 2013 due to animal welfare concerns, Primark banned products containing angora. Primark gave a $2 million donation for wage support and food to more than 3,600 victims of Rana Plaza collapse. The website of Primark has an entire section dedicated to questions regarding CSR. Primark is everything they can to ensure that their customers do not feel like giving up their moral grounds by doing their shopping at Primark. Now the main question to answer here is why we chose Primark for this assignment. Primark being one of the most known clothing retailers have been a part of media with both bad and good image. In the huge market of United Kingdom Primark has captured a large share due to its low-cost focus strategy. Their prices are low as compared to their competitors.

2.    Comparative HRM

The concept of comparative HRM is all about to what extent and how differences are there across countries and cultures (Brewster, 2007). Primark must take cultural differences into account while expanding in the global market. If we compare UK and Malaysia, for instance, we get to know that in the UK their religion is not mostly followed, and the society is more liberal however Malaysia is a more conservative country, and mostly the people follow Islam. The point here is that due to these differences in culture, religion, and values and beliefs lead to different demands in different markets (Ahmed, Uddin, and Ahshanullah, 2009). IHRM is constantly trying to find answers of multiple cultures regarding questions such as “to what extent can a company reproduce their HR practices in different countries and subsidiaries?” (Peterson, Napier, and Shul‐Shim, 2000).

Hofstede’s culture model is a framework used to explain cross-cultural communication. It was presented by Geert Hofstede. It explains how the culture of social impacts on the values of its followers. It tells how these values are translated into the behavior of the individuals. The model is based on factor analysis. It was used by IBM to evaluate values of their employees. The theory is based on four dimensions of culture;  masculinity-femininity, uncertainty avoidance, power distance and individualism-collectivism. A researcher in Hongkong added a fifth dimension to the Hofstede model by the name of long-term orientation.

We have made use of Hofstede’s framework of cultural dimensions to evaluate the United Kingdom against the countries of the Far East, e.g. Malaysia. The evaluation indicates that Malaysia has more power distance than the UK. However other factors such as masculinity, Long-term orientation, indulgence, and individualism are far lesser. Looking at these six dimensions of the two cultures we get to know that the United Kingdom and Malaysia are cultures wise are the complete opposite of each other (TranslateMedia, 2018).  In case of Primark Hofstede’s approach is a strong one as it is very straightforward towards culture. It has econometric data already made for use which clearly explains and defines that values and beliefs are a key to the human behavior. The downside of this approach is it leads to stereotyping and discourages complex contextualization of cultures (Brewer and Venaik, 2012).

By evaluating the working conditions of Malaysia (Far East), it is seen that their labor force has seen rapid growth along with economic growth. There is a large population of people who are born in the 70s. The labor count in Malaysia in 1999 was more than 9 million. At that time the unemployment rate was only 3%. Due to the development of industries across the country demand for highly skilled labor is increased multiple times which has resulted in better wages and working conditions are improving rapidly.

3.    Evaluation of theory

 While an expanding number of studies have explored the part of the national culture in HRM policies and practices used locally, this point of view is also criticized on the basis of empirical and conceptual grounds. Culturalist approaches have a risk associated with them which is the tendency of oversimplifying national cultures and developing such cultural analysis which is based on misrepresented cultural generalizations. As Child and Kiesser (2003) have shown, a methodological issue of utilizing cultural factors is that these have not been consolidated into a model which systematically interfaces together with the investigative levels of behavior, role, structure, and context. It is often hard to differentiate clearly between institutional arrangements and cultural values. Researchers have attempted to mix and test the connection between them. Dore (1973) calls attention to how foundations are made or propagated by powerful, effective factors following their cultural introductions and interests.

Similarly, Hofstede (1980, 1993) contends that culture helps to visualize organizations. Whitley (1992) additionally recognizes cultural characteristics inside his prevailing possibility institutional point of view, contending that foundations incorporate cultural states of mind. As Whitley (1992) argues that background organizations might be considered as prevalently cultural. Another shortcoming of the culturalist approach is the absence of existing research (Schaffer and Riordan, 2003). Researchers have not explicitly incorporated culture into their theoretical framework. With a couple of special cases (Aycan et al., 1999) thinks researchers often do not adequately clarify how and why, i.e., through which sources and components, culture influences the outline and execution of HRM. Likewise, by utilizing the country state as an intermediary for culture, look into dangers not catching all applicable sub-cultural contrasts that may impact HRM (Ryan et al., 1999). We would urge more research to center around inside culture variety when considering cultural inclinations for HRM policies and practices (e.g., Aycan et al., 2007).

4.    Iceberg theory

According to Iceberg theory, there are things that a layman or a customer sees in an organization’s operations and then there are other things which they do not see. What incases of Primark a customer sees, is their marketing side which includes their brand image, media image, CSR, consumer experience, etc. On the other side what a customer does not see is their strategies, demand planning, procurement, manufacturing, warehousing, relations, labor, staff training and development, and recruitment, etc. The worldwide physical development we see is about brands. Strong brand image creates demand for its product before they even enter the market, e.g. apple devices, and this helps them achieve success.

A typical mistake that retailers make is underestimating the measure of work that should be done, and they attempt to move too rapidly. An organization that gets profoundly put and associated with a five-year design may find that it, at last, it takes too long to execute, and when times of its completion comes, the market has proceeded onward, and they never again have the correct offer for the customer (Chew, 2005).

5.    The Rana Plaza Collapse

Rana Plaza Collapse which is also known as Sarvar Building Collapse was structural failure. It occurred on 24th of the April 2013 in Dhaka District of Bangladesh. It was a five-story building which collapsed due to structural failure. The total number of deaths that occurred in that accident were 1,134 and more than 2,500 people got injured. A garments factory in Rana Plaza made products for many clothing retailers such as the Children’s Place, Mango, Walmart, Monsoon Accessorize, Joe Fresh, Primark, Benetton, and Bonmarche. Primark agreed to pay $9 million to more than 581 workers or their families from a supplier of them known as New Wave Bottoms. This supplier of Primark was based on the second floor of the Rana Plaza. An additional $1 million was dispatched to help other workers working in the Rana Plaza.

Primark took steps in this regard although it was not directly responsible for this incident. They took steps as the first benefactors. Shortly after the collapse, an agreement was made by them to improve the working conditions of workers in Bangladesh. They have also renewed their agreement, so they will keep supporting the cause (Werner, Becker, Liu, and Aridov, 2014).

Analysis of the Rana Plaza incident shows that there were cracks in the building structure which appeared on the day before the incident. However, no such steps were taken by the concerned authorities to safeguard the people working in that Plaza. It is said that the construction of Rana Plaza was illegal, but government authorities never took notice of it. Apart from the government, the western companies for whom garments were manufactured are also responsible for this incident. The working conditions of the workers working at the Rana Plaza were not given any importance by either of the western companies. When the cracks appeared the employees should have been stopped from working there which did not happen because the employees working there were threatened by the superiors that if they do not show up for their work they will be fired.

6.    Conclusion and Recommendation

From the above discussion, we conclude that Primark should set its subsidiaries in the Far East. Malaysia and China are good options as host countries because of a number of reasons such as high demand for low-cost garments, cheap raw material, low labor cost and abundance of skilled labor. Primark already has some factories working for them in China. Those factories along with some others could help Primark meet their demands in the Far East countries. Primark can benefit from these countries as the countries in the Far East have a huge rate of population growth and demand for low-cost clothing is increasing day by day.

Our recommendations are Primark should work on their cross-cultural strategies both in terms of products and operations. The company has always been working in the west, and they are going to step into a completely different set of cultures in the west. They will have to train their expatriates for the challenging environment they are going to face in the Far East. For the HR management of Primark’s subsidiaries in the Far East, we would like to recommend divergence and convergence. Class misuse, post-industrialism and adaptability speculations are assembled to recognize particular yet supplementary factors in long working hours (Pudelko and Harzing, 2007).

 Utilizing information from a current four-nation review, a Tobit relapse investigation of all day laborers’ hours uncovers that businesses and independently employed individuals work longer hours than contracted specialists over this area (Brewster and Mayrhofer, 2012). In spite of this convergence, there is a differentiation crosswise over occupations. In Japan, extra minutes are decidedly connected with word related glory, while an opposite design works in China, where low-paid laborers work all the more additional time. Contract specialists in the private division in South Korea and China likewise have longer additional time when contrasted with open segment representatives (Easterby-Smith, Malina and Yuan, 1995). In total, this examination features more divergence than the convergence of working conditions inside East Asia. Primark has to meet the ethical and social requirements of each country and should not pursue any kind of operations in a country where they are considered unethical.

7.    Bibliography

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