Global Steel Industry Analysis
Discuss about the Organizational Behavior for Securing Competitive Advantage.
International business operational management is a dynamic environment that has many different players with many determining factors. There are many factors that play role in the international business operation and some of these factors include cultural differences, human resource development, and international management skills (Daniels, Radebaugh & Sullivan, 2014). The global steel industry is a very competitive environment that is influenced by many customer related issues. Baosteel is a model steel producer that has been striving within this dynamic global business environment with a good growth strategy. The objectives of this report are to analyze the Baosteel based on its international human resource management strategy. International human resource management is an important operational management aspect that determines both expansion and operation efficiencies.
The report structure gives an analysis of the global steel industry where Baosteel is the second largest producer of steel. The report under global steel industry analysis the report explores major competitors within the industry, their age, location and market-related analysis. Secondly, the report gives the analysis of the Baosteel international human resource management with a focus on the strategy used by the company to manage its employees, especially on the Europe subsidiary. Thirdly, the report explores various challenges or problems that affect international human resources management, the importance of these issues on the suggested solution for these issues. Lastly, the report recommends the areas that need improvement for the organization to continue striving in the global steel industry. This report provides the analysis of the global steel industry with a focus on Baosteel and its international human resource management topic (Isobel & Lowe, 2008).
Baosteel is a Chinese steel producer that currently is the largest steel producer in the country and the second largest steel producer in the world. The company was established in 2016 following the merger of Wuhan Iron and Steel Corporation making the company surpasses major steel producers in the country. The company is based in Pudong, Shanghai, China with its subsidiary Europe Baosteel headquartered in Hamburg Germany. Some of the products of the Baosteel can be divided into categories such as Carbon Steel, Stainless Steel, and Special Steel. For instance, carbon steel category has a variety of products and these include bar, Heavy plate, HR steel sheet, CR steel sheet, Wire rod, Pipe tube (Baosteel 2012).
The company has its Europe division that is based in Germany and trade under name of Baosteel Europe. The company subsidiary is located in Hamburg Germany and employs both internationals and Germans. This subject the organization to international human resource management challenges. The company has been expanding over the past years is the first Chinese company that has to expand and takes a good market position in the international market (Buckley, 2010).
Baosteel: International Human Resource Management Strategy
The global steel industry is a dynamic industry with many determinants factor and many key players in the industry. The global steel industry is currently faced with a number of issues that include slow growth, overcapacity, and digitalization of the steel trade (Marquis & Tilcsik, 2013). Firstly, the dynamic nature of the steel industry is based on its slow demand growth rate that has been witnessed over the past few years. Secondly, another issue in the global steel industry is overcapacity that is projected to persist for years in the near future. Thirdly, digital development of the steel commerce is characterizing the global steel industry (Steel Orbis, 2016). There is a much different company that takes the share of the international steel business. Some of the organization that is in the top five steel production list are ArcelorMittal, HBIS Group, NSSMC Group and POSCO.
The global steel industry has many players that are in stiff competition within the market. Some of the competitors within the market include ArcelorMittal, HBIS Group, NSSMC Group and POSCO. These companies are the most competitive and form some the top largest producers of steel in the world.
Firstly, ArcelorMittal is currently the largest producer of steel by volume and this is evidenced by its total production in the year 2016 that stood at 95.45 tonnages. In addition, the company was formed in 2006 following the merger between Arcelor by Indian owned Mittal Steel. The company is located Luxembourgish from where the company has various branches throughout the world. Being the largest steel producer in the world, the company has many portfolios that range from mining, steel production and research in the industry. Some of the products that are produced under the brand name include construction, automotive, domestic appliances, and energy, transport, packaging and by-product sales. The company currently employ more than 260,000 employees were in Europe alone. The size of the market share of the company is currently 10% of the world’s steel production (Steel Orbis, 2016).
Secondly, HBIS Group is another Chinese company that has been the second largest steel producer before the merger of Baosteel that become the second largest steel producer in the world. HBIS Group has also emerged to be the third largest producer of steel with 46.18 tonnages having been formed in 2008. The company was formed following the merger of Tangshan Iron and Steel Group and Handan Iron and Steel Group of Hebei Province. The company produces a wide variety of products such as cold-rolled sheet, Ultra-strength rebar, heavy plate, steel pipe and special steel bar. In the global market, the company has three main areas of focus and these are global steel manufacturing, global marketing service, and global technology research and development. Within the local market, the company has 8 subsidiaries taking the right position in the Chinese steel market (Wagner & Hollenbeck, 2010).
Challenges Affecting International Human Resource Management
Thirdly, the NSSMC Group is another company that also plays an important role in the global steel industry. The company is currently the fourth largest producer of steel has been the second largest producer of steel in 2014. The company was formed in 1970 following the merger of Fuji Iron & Steel and Yawata Iron & Steel. In addition the company based in Chiyoda, Tokyo, Japan from where the company runs many different branches globally. Some of the products of the company include steel, flat steel products, long steel products, wire products, plates and chemicals (Stoddard, 2015).
Fourthly, POSCO is the fifth largest steel producer in the world with total production of 41.56 tonnages. The company was formed in 1968 a currently at its 50th year while doing steel production. The company produces a number of products that include steel, flat steel products, wire products, long steel products and plates. The prime location of the company where company headquarter is located in Pohang, South Korea (Levit, 2017).
The Baosteel has a good international human resource management that considers many factors as evidenced by the company’s international perspective. The organization has a good reputation for its international human resource management. Firstly, the selection of employees is based on a strict procedure to ensure that employees are selected based on competency. Secondly, the company treasure on the training of newly recruited employees on the corporate culture before starting work within the company. One of the key criteria for application for the company human resource is university graduates (Brewerton & Millward, 2010).
Thirdly, promotion is based on the training and those employees that have been trained has a chance of being promoted to the senior executive position within the company or further transfer to other countries. This approach that is used by the company aims to train the employees on specific culture especially on other countries’ culture to facilitate international human resource development. The human resource management of the company aims to increase the skills and human resource capability to deliver services under different cultural environment especially in the global platform (Hill, 2014).
Another important human resource management aspect is compensation that is very attractive to the company’s employees. The company indicates that their compensation is excellent attracting many applicants. Therefore the company offers good employment opportunity both for Chinese and internationals. The company compensation is consistent with the higher quality of living in Shanghai than other cities. This compensation is also coupled with spouse job offered to employees thereby creating a good human resource condition (Jonathan, 2010).
Proposed Solutions
Lastly, a more recent approach of the company is based on the mentoring strategy where employees are assigned mentor upon completion that the company can recommend the employee for any professional position in another company. This is due to the need to change the human resource management to strategic nature. Mentoring strategy is enhanced by continuous training for employees to acquire more skills and profession. The basis of the strategy is to appoint senior employees to watch over young talented executive employees (Sirkin, Hemerling & Arindam, 2008).
The international human resource is a technical issue that has been affecting the operation of the Baosteel. There are different challenges that are affecting the human resource management for the company. There is also need to consider the reasons why these issues are challenging for the company. A complete analysis of human resource challenges requires finding a solution to these challenges.
The cultural differences are a major challenge that affects the Baosteel especially the European subsidiary. The human resource management is affected by both national culture and corporate culture as many employees struggle to emulate the corporate culture of the firm and had to be trained. Germany is the central base for the European Baosteel subsidiary, Germany has different national cultures that are totally different the culture of the Chinese people. Cultural differences have influence in international business operation management and human resource management (Flamholtz & Randle, 2011).
Secondly, human resource development is another challenge that is affecting the company. Being a Chinese company with a different approach to human resource planning and development, the company has been facing the challenges of recruiting employees and training them. This has been a challenge particularly with the difference in the culture between the Germany and China. In addition, the company has been advocating for competency-based recruitment for employees and subjects them to vigorous training. This has limited framework that accommodates the Germans during recruitment. Human resource development influences the development of steel expertise in the international platform (Paauwe & Boon, 2009).
Communication challenge is another human resources management issue that has affected the operation of the company at the international level. Communication framework in terms of language used within the Baosteel European subsidiary is an issue that affects the transfer of Chinese exports to Germany. It is clear that within Germany the company uses three different languages that include Chinese, German and English for communication. This coupled with challenges, especially when dealing with locals that are well conversant with their local German language. Communication challenges have an influence on the interpersonal relationships within the Baosteel Europe operations (Zhang, 2009).
Competitors Analysis
Firstly, cultural differences are issues that affect the human resources management since it affects the organizational behavior and organizational communication. According to Johnason (2009), the cultural difference between China and Germany has an impact on the organizational behavior of employees and the communication. Firstly, the Germans have their time frame and this is not the same as Chinese who can work long and overtime. This highly affects the ability of senior management to manage employees particularly the German employees. Secondly, the cultural difference is a challenge since it affects the communication, particularly interpersonal communications. For instance, national culture affects the language that is used in communication within the organization (Paauwe & Boon, 2009).
Secondly, the human resource development has been an issue since it affects the ability of the new employees to effectively carry out task within the organization. Lack of proper structure of training human resources and criteria for recruitment has been challenging especially international recruitment. The basis of this challenge is based on the ability of talented German citizens and other nationals to meet the international challenging leadership and management. This determines the dynamic international human resource management. Studies show that there are a few steel expertise and human resource development influences the development of this expertise that is necessary for the global steel industry (Gazi & Zyphur, 2009).
Thirdly, the communication challenge is an issue since it affects international transfer of experts from China to Germany. Most of the business transactions between the company with locals in Germany has been conducted by Sino-Germans due to this language problem (Okolo, 2012). In addition, the difference in language highly affects Chinese without a clear understanding of German language. When conducting business the communication challenge, therefore, leaves only experienced employees to transact the business on behalf of the organization. Communication framework determines the mode of training and the general operation of the international Baosteel subsidiary (Johnason, 2009).
Firstly, the solution for the cultural differences and cultural conflict has been suggested as over emphasis of organizational culture as compared to other cultures that affect the organization. One of the strategies that have been used by the Baosteel to solve the cultural challenge is instilling the corporate culture among employees. The basis of promoting organizational culture is through training new employees before allowing them to work within the organization. Secondly, intercultural competency is another way to reduce the challenge of cultural conflict. The company can train employees on cultures of other countries especially those countries where the company can expand its operation to (Conaty & Ram, 2011).
Conclusion
Secondly, solution for the challenges is based on the development of human resource framework. The international human resource development with a major focus on criteria for selection, recruitment, and training to ensure that the there is limited cultural conflicts. The human resource development framework offers the solution that specifically concentrates on training new employees on the different work environment. Strategic human resource training is another important aspect of human development that need to be considered (Hale, 2014).
Thirdly, the solution for the communication challenge rests on the development of proper communication framework. The company communication framework that defines the used of three languages and these include Chinese, Germans, and English is required within the company human resource management. When operating the business in Germany the company needs to come up with a clear strategy that will ensure that the three languages are used within the organization without conflict between employees (Luthans & Doh, 2015).
Conclusions
In light of the challenges that are affecting Baosteel in the international platform, there is some recommended improvement that needs by implemented with the company. Firstly, the company needs to develop the human resource framework that will consider international environmental factors. A good human resource strategy focuses developing human resource in all conditions that coincide with international standards. This strategy needs to focus on areas of training and scope of training that will lead to professionalism. For instance, a good human resource development strategy with the capability to help employee adapt to cultural differences and international management is required in the organization (Essays, 2013).
Secondly, the company needs to understand various international cultures and train employees on such culture. Organization culture also needs to be part of training for new recruits as this helps them understand the core values of the organization. Intercultural competency should be the goal of the training as the international human resource management is coupled with many intercultural windings. This culture needs also to defines a clear organizational behavior that is in line with organizational culture (Flamholtz & Randle, 2014).
Thirdly, the company needs to develop a clear communication framework that will consider international perspective. The organization needs to have communication framework that is developed based on international language as this affect human resource in the international platform. One of the communication challenges is the language skills that are required especially on an international level. For instance, working in Germany without knowing the most preferred language in Germany is a big challenge. Those employees that transferred to Europe from China need to be subjected to communication training to enable them to understand German language and English language as this is key for international communication (Hughes, Clegg, Robinson & Crowder, 2012).
Lastly, another strategy to help in solving the human resource issue in the international platform is digitalization of the human resource management. The company needs to develop and implement human resource management technologies that will ensure good international operation. This implies that the human resource in the current modern international steel industry requires digitalization to help monitor and manage human resources from any point in the world. In addition, the company need develop a human resource system that will have all the company employees’ details for the ease of transfer, skills upgrade and compensation information. This will help in ensuring a fair distribution of employees within the company and even in the international subsidiary (Johnason, 2009).
Conclusion
In conclusion, the international business operational management is a dynamic phenomenon that is characterized by several challenges. The global steel industry is equally a multi-business environment with several players and under several factors. Baosteel is a key player being the second largest steel producer in the world. The company has its subsidiary in Germany thereby making the company take a position in the Europe steel market and global steel market in general. The company, therefore, has international human resource strategy that focuses on good recruitment strategy, human resource development and compensation of the employees. The company is affected by human resource issues such as cultural differences, clear human resource development framework, communication framework and steel experienced expertise. In light of the challenges affecting the business the business need to develop human resource development with a focus on training, required skills, intercultural competency, and communication framework. Lastly, the company needs to focus on the development of communication framework that clearly highlights the language of communication and the framework that defines the usage of the three languages Chinese, English and German to avoid in operation.
Reference
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