Managing diversity in a Chinese-owned multinational IT firm

Company background

Established in 1988 in Beijing, Lenovo Group Limited (formerly known as ‘Legend Group Limited’) is the largest IT enterprise in China. Lenovo employs some 25,000 staff in all its operations in nearly 70 countries, but with the majority of employ- ees working in China. In 1984, with an initial capital of RMB 200,000 funded by the Chinese Academy of Sciences, a government-funded institution, 11 researchers formed the parent company of Lenovo. It was the first company to introduce the concept of the home computer in China. Lenovo’s main business activities are in the sale and manufacturing of desktop computers, notebook computers, mobile handsets, servers and printers. Lenovo is a stock-listed company, with the Chinese government holding over a quarter of its shares. In April 2003, the group adopted a new logo and the English brand name ‘Lenovo’, replacing the original English brand name ‘Legend’ in order to appeal to the international market. The English company name was also officially changed to ‘Lenovo Group Limited’ a year later. In December 2004, Lenovo spent US$1.25 billion to acquire IBM’s PC business. This was the largest cross-border acquisition in China’s IT industry (China Business, 13 December 2004). The acquisition process was completed in May 2005. The marriage of IBM and Lenovo created one of the world’s largest PC powerhouses. IBM possessed strong competitive advantage in the higher end of the customer market in its distribution channel, high quality customer resources, which complemented that of Lenovo. The two companies have main- tained a long-term cooperative strategy since the acquisition, with Lenovo having access to some of IBM’s key resources, such as technology, sales force, PartnerWorld, Global Finance and IBM Credit. The continuing expansion and globalization of Lenovo has brought a number of challenges to its HRM function, including the alignment of corporate HR strategy and DM after the acquisition of IBM’s PC business. Below are some of the issues that illustrate the challenges.

Managing foreign employees in China

Lenovo’s growing global presence in the IT sector has in recent years attracted an increasing number of non-Chinese citizens who wish to work in its operations in China. This is in part because they want to spend time in China to gain wider work experience and a deeper understanding of the country. These foreign citizens are employed by Lenovo under the same employment conditions as those offered to Chinese citizens. Free working meals and company-subsidized accommodation are some of the benefits that Lenovo offers its employees. These are traditional and typical workplace welfare provisions of Chinese firms. Under the housing scheme, newly recruited single employees are provided dormitory accommodation. Since housing is expensive in Beijing, this often takes the form of one bedroom shared by a few employees of the same gender. This arrangement is normal and acceptable to Chinese employees – Chinese students also share their dormitories in schools and universities, and in sweatshop manufacturing plants the situation is far worse where ten or more rural migrant workers are crowded in a room with poor facilities. However, foreign employees, though only very small in number compared with the Chinese employees, find it difficult to get used to this idea because of the lack of privacy. Lenovo (China) has no special policy to accommodate their needs. Different management style is another source of cultural shock to foreign employees. According to an HR manager, foreign employees all emphasize their cultural shock when they come to China. However, Lenovo (China) has not developed a formal policy to manage these cultural shocks. This has led to the turnover of a few of the foreign employees and the company has made no effort to retain them.

Managing Chinese graduate returnees from overseas

Since the early 2000s, an increasing number of Chinese who went abroad for their higher education have been returning to China to seek employment and career development. The majority of Chinese overseas graduate returnees (known as haigui in China) are keen to work for multinational firms, and are often the favourite candidates. Lenovo is among the top employers of choice for which haiguis want to work. These repatriated Western educated and trained graduates bring with them different life styles, perspectives and (often unrealistic) expectations that may depart from Chinese norms. Some of them are said to be complacent and consider themselves superior to other graduate employees who have not been abroad for education or training. They expect high salaries up front, fast promotion, flexibility and autonomy in their work. Turnover is common among haiguis when expectations are unmet or better offers are available elsewhere. How to recruit and manage overseas graduate returnees effectively is an important issue for MNCs operating in China. Companies are now reportedly more cautious in recruiting and managing these returnees because they are seen as ‘demanding’ employees who are difficult to retain. Lenovo shares some of these issues. Although turnover has not been a major problem, how to harmonize the relationship between haiguis and home- grown graduate employees is sometimes a challenge for line managers.

Gender equalities

Prior to Lenovo’s acquisition of the IBM PC business unit, Lenovo had more women at the senior management level. The proportion of women in senior management has actually declined since the acquisition because it is now part of a bigger inter- national operation. Two main reasons are attributed to this change. One is that there is a lower proportion of women at senior management level in the acquired business unit of IBM than in the Chinese operation. Another reason is that Lenovo has been through successive rounds of senior management restructuring after the acquisition, partly to do with the post-acquisition integration and partly to do with the poaching of senior managers among IT firms in China. Cultural clashes triggered by the post-acquisition integration have led to the departure of a number of senior managers. When new managers are recruited, they tend to bring their own people and HR initiatives with them, which will later be displaced by their successors when those managers depart. As an HR director observed, ‘It is organizational politics, rather than equal opportunities, that we consider in the recruitment of senior managers. You need to be competent as well as well connected to get the senior management’s job, and men tend to be better connected than women in the IT sector in general.’

Developing a global diversity management strategy

According to informants from Lenovo (China), diversity is not a key issue in the workforce in China. Therefore, it is not a priority of the company. The major task is post-acquisition integration to align the organizational cultures and become a truly international company. Nevertheless, Lenovo (China) does emphasize the need for employees to respect other employees’ rights and privacy. Aggressive or discriminaory behaviours are forbidden, even as jokes. These expectations are written in the business conduct guidelines for employees. However, Lenovo (China) does not have any specific equal opportunities or diversity management programmes to enforce these clauses. The acquired business unit of IBM has good HR practices, for example, WLB and DM. These have not yet been transferred to the Chinese operation due to staff shortages. There was a corporate initiative (stimulated from the US side) about grouping women at international level together to have a global forum to discuss diversity issues in 2006. Unfortunately, budget constraints meant that the plan was set to one side. The HR directors from Lenovo (US) are well aware of the challenge they face in transferring their US-developed diversity management programme to other branches across different countries and cultures. The US HR team are the people who are familiar with the concept and responsible for promoting its global diffusion, and they are approaching the task with extreme caution. This is in part, as they admit- ted, due to their unfamiliarity with the local environments in different parts of the world, although they are planning to visit Lenovo (China) for the first time. How to accommodate the diversity of the global workforce and leverage it to enhance the performance of the firm on the one hand, and how to develop a strong corporate culture that all employees will identify with on the other hand is their main HR con- cern, and a solution has yet to be found. According to all managerial informants, the corporate priority is talent management. A new scheme called ‘Mobility Plan’ has been implemented at the international level. The purpose of the plan is to give managers an opportunity to work overseas to gain international experience to be able to lead at a global level. It is not aimed at Chinese managers in principle, but in reality has mainly involved sending Chinese managers to the US for development.

Questions:

1: Identify and explain the main issues in this case study

2. What are the key issues of diversity management in this case study and how are they manifested?

37) There has been more leadership research on ________ differences than on other types of diversity.
A) religious
B) racial
C) gender
D) ethnic

38) Leadership behavior is ________.
A) only influenced by national culture
B) not influenced by the type of industry
C) influenced by other situational variables besides national culture
D) unaffected by national culture

Strategic Marketing:

Porter’s Value Chain is made up of Primary Stages and Support Activities.

Use a matrix to show how Porter’s Value Chain can be used to make decisions about which of Porter’s Generic Strategies is appropriate for a company to use.

To do this, set up a table that lists each of Porter’s Generic Strategies as a column heading and each of the primary stages and support activities of Porter’s Value Chain as rows. Fill in the appropriate cells to explain where the value chain analysis may provide insights into the different strategy type options.

Use examples to aid your description.

Word-count: 500 words maximum.

1. With perception being the main way we view one another, could there be a problem in the workplace with people who have different perceptions as you? Think of those who might come from different cultures, have different attitudes, values, and upbringings.

The following table provides data for a project. Use the data to answer the following questions

1. Draw a network to represent the above project.

2. What is the critical path? What is the expected completion time? What is the variance of the project completion time? (Complete the expected task time and variance of time calculations.)

3. The project manager realizes that it is best to take at least 20 weeks to complete the project. However, she also thinks that delaying the project past 26 weeks will result in considerable loss for the company. What is the probability that it will take between 20 and 26 weeks to complete the project?

4. For the next two parts, assume that the expected times you calculated are the deterministic single point estimates of time. Because of work in other projects, the manager realizes that is very likely that activity B will take 5 more weeks than initially determined. What is the new completion time for the project, given this information?

5. The manager wants to reduce the project time by two weeks. How can this be achieved? What are the implications? (Answer this question conceptually.)

After graduating from college, you work briefly as a salesperson before filing for bankruptcy. As part of your petition, you reveal that your only debts are student loans, taxes from the last year, a $742 Visa credit card bill, and a claim against you based on your misuse of customers’ funds during your employment. Are these debts dischargeable in bankruptcy? Explain your answer

What is the difference between a soft and hard page fault?

Question 2
There exist a number of strategies that can be considered for implementation.
(a) Identify four (4) issues in strategy implementation.
(b) Create four (4) types of strategies using the SWOT Matrix in the matching stage of strategy formulation.
(c) Describe any two (2) of the SWOT Matrix strategy types.

On January 1, 2016, Aspen Company acquired 80 percent of Birch Company's voting stock for $332,000. Birch reported a $370,000 book value and the fair value of the noncontrolling interest was $83,000 on that date. Then, on January 1, 2017, Birch acquired 80 percent of Cedar Company for $184,000 when Cedar had a $197,000 book value and the 20 percent noncontrolling interest was valued at $46,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name with a 30-year remaining life.

These companies report the following financial information. Investment income figures are not included.   

Assume that each of the following questions is independent:

1. If all companies use the equity method for internal reporting purposes, what is the December 31, 2017, balance in Aspen's Investment in Birch Company account?

2. What is the consolidated net income for this business combination for 2018?

3. What is the net income attributable to the noncontrolling interest in 2018?

4. Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year:

What is the accrual-based net income of Birch in 2017 and 2018, respectively?

a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2017, balance in Aspen's Investment in Birch Company account?
b. What is the consolidated net income for this business combination for 2018?
c. What is the net income attributable to the noncontrolling interest in 2018?

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Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year:

What is the accrual-based net income of Birch in 2017 and 2018, respectively?

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1. Calculate the   book inventory (round to two decimal places) , the  shortage or overage dollars (round all answers to two decimal places), and then the  shortage or overage percent (but leave off the % sign) given the following information:

               Opening inventory                                                  $   64,200

               Net purchases                                                             154,600

               Transfer in                                                                      3,400

               Transfer out                                                                   2,700

               Markdowns                                                                 11,300

               Markdown cancellations                                                   760

               Net sales                                                                     141,300

               Employee discounts                                                       1,920

               Closing physical inventory                                         63,760

In depth, explain the strategic management and human capital of PETCO.