Question

I have to write a paper that provides a brief overview of global HR (Human Resources) Concept. I have to include a description of my selected organization as well as the country in which the organizations is intending do business internationally. I have selected WalMart expanding into India.

I have to include a discussion of how the four factors that affect HRM in international markets would affect your selected organization's approach to global HRM: (a) cultural dimensions, (b) education-human capital dimensions, (c) economic systems, and (d) political-legal systems.

I am having trouble with section c, economic systems. How will India's economic system affect opening a store in Walmart? What are the benefits, the disadvantages and what will be different if a store was open in this location?

Answer 1

How will India's economic system affect Wal-Mart?

India is a mixture of a Socialist and a Capitalist economy. Hereby, the states and central government within India plays a crucial role in every business dimensions. Therefore, if a giant business retailer such as Wal-Mart wanted to enter India, they have convinced both the state and central government through their proposal. Further, the decision of the state government and central government is influenced by the civilians. Even if the Wal-Mart convinced civilians, state, and central government, it may find it hard to operate with respect of Indian economic system due to the following reasons:

Heavy Competition: India is already a business populated country, moreover Indian economic policies such as “Make in India” and other such favourable policies is supporting more foreign companies to enter India in all segments including retail. Henceforth, Wal-Mart in India has to undergo heavy competition with domestic and other international retails.

High Taxation: Unlike other countries, the taxation percentage is very high in India. On an average 22%, GST (Goods and Service Taxation) is placed on most of the retail goods. Therefore, Wal-Mart in India cannot provide its goods to people at competitively less price than their competitors.

Complicated Legal Procedure: From registration to the operation of the retail business in India, the procedure is lengthy, complicated and required kick back at every point of time. This is totally against Wal-Mart policy. Therefore to start and operate Wal-Mart the total policy had to be restructured according to India.

Rebel of Domestic retailers: As mentioned before Indian central and state government decisions are influenced by civilians, which include domestic retail business individuals. Hereby, these domestic retail business individuals have an association and through association, they may make a petition to the government. This is a common phenomenon, As Wal-Mart is a huge threat to domestic retailers, therefore Wal-Mart have to tackle legal petitions in court continuously alongside business operation.

Hence, on an outset, Wal-Mart may find it hard to operate in the Indian economic system as it did in the U.S.

What are the benefits, the disadvantages and what will be different if a store was open in this location?

Advantages:

·         Increased sales due to a large amount of population.

·         Increased brand image

·         Operational productivity can be increased by correlating with other business such as retail suppliers, e-commerce sites such as Flip kart, Amazon etc.

·         Locational advantage: having a business correlation with local Indian suppliers, the retail products can be transported to any part of the world effortlessly. This is because India is almost middle of world longitude and latitude, further it has the excellent port infrastructure and surrounded by sea.

Disadvantages:

·         Heavy competition

·         Complicated legal procedure to register and operate

·         Lack of skilled labour force in the retail segment: According to McKinsey research Indian retail labour force productivity in India is calculated to be 6%, which is least compared to many international peer countries.

Difference that can be noticed if Wal-Mart was started in India:

·         More Indian branded products will be displayed rather than international products on the rack.

·         Wal-Mart store size might shrink because India is much populated and finding even 10,000 Sq ft space would be very hard.

·         The retail and operational policies will be completely customized according to India.