Executive Summary
Globalization is commonplace in the modern world, and businesses are its leading advocates. Many companies resort to extend their operations beyond the geographical boundaries of their locations to supply their goods and services. Some of the multinational organizations are Apple Inc., Microsoft, Samsung, Wal-Mart, and BHP Billiton Limited. This paper focuses on the later. It gives a report of how this company plans to seek information a market (Mali), in which it wants to start up a new business. Being a mining company, BHP targets Mali because the country’s leading export commodity is gold. Despite the many miners in Mali, BHP Billiton believes that this country has a ready market that will consume its product and services. Mali also faces several problems that can disrupt the performance of a new business or even lead to its closure. However, BHP believes that it can counter all those setbacks to establish and expand its ventures in Mali.
Table of Contents
Executive summary 2
1.0 Introduction 4
2.0 Discussion 5
2.1 How the issue affects international HRM 5
2.2 advise to the client regarding the issue 5
2.3 Link between addressing the issue and success of the organization’s HR strategy 8
2.4 Examples and discussion 9
Bibliography 11
1.0 Introduction
Any investor would like to see his or her business grow. Companies develop in many ways depending on their size, location, and the goods they provide, among other aspects. Multinational enterprises, for example, expand by increasing the number of partners or starting up a new business in another country (Dowling 2008). These activities call for extra work, focus, and dedication because they demand much time money, time, and many more. Most importantly, the company must conduct an extensive research before opening up new business in another country. This paper reviews BHP Billiton, the world’s largest mining company, and its plans to open up a new business in another country. Since this company runs several companies in many parts of the world (25 nations), it has the potential and the financial powers to do so in almost any country, especially any that deals with mining (Harzing & Pinnington (eds.) 2010).
This paper suggests that it should try making a new investment in Mali because it mines and exports gold. Since BHP Billiton already operates in South Africa, one would deduce that it could start up a new business in another country in Africa as well. This article will examine the Human Resource Management issues that would bar or influence the performance of the new business that BHP plans to start up in Mali. It also gives a few suggestion on how the company can handle the challenges that it might face when it invests in that country.
2.0 Discussion
2.1 How the issue affects international HRM
Multinational companies use integrative human resource strategies that allow them to share the best practices from different sections of the firm to improvise a global system that creates room for consistency. Multinationals also use that criterion to gain efficiencies of scale and scope across the countries that they set up their businesses. At the same time, each of their affiliates has to recognize and set up human resource practices that suit their local investments, cultural systems, and employment laws, among other things to open up rooms for local advantages (Xenikou & Simosi 2006).
Being a Multinational Enterprise (MNE), BHP Billiton Limited must adopt practical ways of balancing both international and local pressures in its human resource management system. For example, it will use its values and norms to align the differences in those of its new location, Mali. Since most employees have similar socializations, the company should use management practices that would help it deal with the new staff in Mali. It could offer training programs if they are unskilled or communicate all the expectations of the business to them. In addition to that, BHP Billiton must recognize that the Malians could prefer other forms of management that are suit the way they work (Thomas & Inkson 2004).
2.2 advise to the client regarding the issue
BHP Billiton Limited is a multinational company, and, since it has opened up businesses in over twenty countries, it has the experience to deal with almost any setback that might hamper the survival of its businesses. However, the following strategies can also help it improve handle new challenges as well as improve the performance of its ventures in a new location (O'Hara-Devereaux & Johansen 1994).
For starters, it must conduct an extensive research about the country it wants to invest in to know and analyse a few things before its sets up a new business. For example, it will have to study the market for its products before delivering them. The research will involve investigating the prices for the goods it plans to sell as well as those of substitutes, availability of customers, number of businesses selling the same items, consumer behaviour, and ease with which it can sell, among other things (Chhokar, Brodbeck & House (eds.) 2013).
Competition is one of the challenges BHP Billiton Limited must expect to deal with if it plans to invest in Mali. The country has several mining companies that would compete and try to outdo any new investor. Competition will also come from other companies that have better establishments or already dominate the market (Eagly, Johannesen-Schmidt & Van Engen 2003). For example, France controls most businesses and Malian imports. In addition to that, other countries, especially China, provided goods at cheaper prices, allowing them to lure many customers and gain market shares. In business relations with the people of Mali, the French companies hold a competitive advantage over those from Australia. However, BHP Billiton Limited can face up the challenge in many ways. For example, it can use latest technology that will provide quality services. It could also consider offering low prices to lure and command a large customer base. Unless improvises ways of surviving in the new market, BHP might make profits from its new business in Mali (Blase & Anderson 1995).
Another issue that would trouble BHP Billiton Limited is language barrier. Just like other multinational investors, this company uses English in its international venture. However, that approach would cause it a few problems if it were to start up a new business in Mali because the country prefers François to any other language. In fact, France shares a historical commercial partnership and a common language of business with Mali. Malians have a better understanding and familiarity with the French traditions of business, names of products, cultures. In addition to that, they also identify with the generous French export subsidies and trade financing (Jul-Larsen et al. 2006). However, those factors do not bar companies from other countries from investing in the country. They use a criterion that BHP Billiton Limited can adopt as well. It will have to hire agents and distributors who will help them understand the market, communicate with customers, and operate their businesses in the country.
Humanitarian crisis are also likely to trouble BHP Billiton Limited if it invests in Mali. For example, the high levels of insecurity in the country could see new businesses dealing with attack on the employees, theft cases, or raids. The Malian government has changed several issues on the business sector to improve its performance, but those attempts have not eradicated corruption. In addition to that, it has a high poverty index, and the labour sector is unskilled. BHP must come up with practical measures of countering these problems for its new business to flourish (Hanson & Stuart 2001). For example, it needs to offer training programs to the Malians it will hire to enable improve their professional skills and adapt to the requirements of the company. Given that a significant percentage of the Malian population lives below the country’s poverty index, BHP should review its wage, structure to cater for livelihoods of the Malians it will employ (Blase & Anderson 1995).
Security issues are rife in Mali, and affect most businesses, especially new ones, in the country. Currently, the humanitarian assistance in the international community aims at eliminating the security threats and attacks from the terrorist groups in northern Mali. For example, United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) tries to make Mali a safe place by fighting terror unions such as MUJAO, Al-Qaida in the Islamic Maghreb (AQIM), and Ansardine. The insecurity issues, coupled with limited infrastructure and businesses in the north, have had several impacts on the other economic activities in the rest of the country (Chhokar, Brodbeck & House (eds.) 2013). Despite the reformations, BHP Billiton Limited should still avoid investing in the northern parts of the Mali. Insecurity has troubled the north for many years; one would feel that things would settle just for once. A few security threats and attacks could still arise, making the north a ‘no-go’ zone (Dowling 2008).
Just like any other nation in the world, Mali has a political structure that dictates almost everything in the country. The political crisis in both Mali and Cote d'Ivoire in the past few years has paralysed some business activities. For example, studies reveal that the corruption cases in the Malian economic sectors emanate from Senegal, Ivory Coast, and Ghana. As a result, these issues thwart both the imports and exports of goods to and from Mali, respectively (Eagly, Johannesen-Schmidt & Van Engen 2003). Therefore, BHP will not find it easy to delivery its products to the country if starts up a new business. The best part is, it can get help from the Australian Embassy in Mali. The Embassy connects new Australian enterprises with the Commercial Office should they plan invest in Mali. It also gives suggestions for the new markets and provides economic overviews for the Australian newcomers.
In addition to those, the Australian Embassy gives free services such as allowing an International Company Profile to investigate any firm that an Australian exporter signs any contract with or wants to bring goods to it. Usually, the Embassy also provides Gold Key Service, in which it organizes meetings with the potential distributors or partners so any Australian exporter may go to Mali and meet with them in person before delivering products. My feeling is that BHP Billiton Limited should use this strategy because it does not have a better understanding of the Malian markets. It could also gather sufficient information about the country, competitors, prices, trade regulations, and security issues from the Australian Embassy before making the final decision (Hanson & Stuart 2001; Harzing & Pinnington (eds.) 2010).
2.3 Link between addressing the issue and success of the organization’s HR strategy
BHP Billiton Limited has the financial powers to invest in almost every part of the world. Having established businesses in about 25 countries across the world, one would deduce that it has the capacity to do so in any new location it might want. According to this paper, BHP Billiton can start up a business in Mali. However, the country faces several issues that hamper the progress of any new business or even leas to its closure. That factor does not imply that venturing in this country is impossible (Jul-Larsen et al. 2006).
Just as this paper points out, the success of BHP or any other company that wants to run a business in Mali is dependent on its ability to handle those issues. One of the problems could thwart the progress of BHP’s new enterprise in Mali is international human resource management. If it handles all the issues relating to hiring and managing its workforce, then BHP will become successful with its new plan of owning a company in Mali (O'Hara-Devereaux & Johansen 1994).
Since the labour force in the country is unskilled, BHP must set up training programs that would see it assemble a skilled team of professional that can handle the task assigned to them. It also needs to review its wage structure because most of the Malians live in poverty. Additionally, the company should develop ways of tackling the competition for the same workforce from the other mining companies in the country (Thomas & Inkson 2004).
Insecurity is a concern in Mali, and it affects the performance and proper functionality of many businesses in the country. Therefore, BHP must protect its employees from threats and attacks to enable them work in a safe environment. In general, BHP Billiton Limited has an opportunity of establishing business in Mali because it can handle both the local and global pressures on human resource management practices. That is to say that, the success of BHP’s new business in Mali will depend on how it handles the existing issues in the country and how well it manages its employees (Xenikou & Simosi 2006).
Having had successful spells with its investments in South Africa and Mozambique since 1994, BHP Billiton Limited has the experience and expertise to operate in the African markets. Gold is the Mali’s leading export product, and miners in this country have an opportunity of increasing the performance of their businesses. Similarly, BHP will also succeed if it opens an affiliate in this country. This factor, coupled with the progress it has made in other countries, implies that BHP’s new enterprise will thrive (Xenikou & Simosi 2006).
2.4 Examples and discussion
BHP Billiton Limited specializes in mining metals, and does that in many (25) countries. The 26th nation that would need its services, as well as products, is Mali. The country has several crises that need any new investor to handle before starting to run any business. Besides, the global and local human resource management pressures would hamper the performance of any new venture or even lead to its closure if not handled. However, BHP has practical measures it uses to counter those shortcomings to start up a company in Mali (Blase & Anderson 1995).
For example, it can use agents and distributors to penetrate the markets as well as communicate with the new customers. Alternatively, it can extend its operations in Mozambique to Mali since the two countries are close. It could start by small-scale ventures in Mali or transporting a few products from Mozambique to Mali to test the possibility of starting a new investment. In essence, BHP has an opportunity of thriving in Mali if it handles the human resource management issues as well as those that makes the Malian markets unpredictable. Besides its financial powers, the company has an experience of running businesses in Africa, which will help it operate the new one. It can also seek help from the Australian Embassy in Mali to start up and run its new enterprise (Jul-Larsen et al. 2006).