Starwood hotel chain expand their business into Kazan market?
Kazan is one of the largest cities in the Republic of Tatarstan in Russia. With a populace of just one, 143, 546 recorded for the year 2010 in the earlier results of the national Census, it ranks as the eighth most populated city in Russia and was branded as the third capital of Russia in 2009. Subsequently, it has also been dubbed as the sports capital of the region. The importance of the city can be recognized from the recent level of importance it has been given by the Russian government as it continues to increase the economic strength, foreign investment and trade for the country.
As technology brings the planet closer together, more businesses have become multinational corporations (MNC) and have included in a method in their administrative policies to strengthen their market share and profits. The success to become a profitable MNC usually depends upon expatriates who are able to successfully implement the company's home strategies in the host country. Selecting employees willing and in a position to complete a global assignment efficiently is becoming vital to the success of numerous multinational businesses (Shaffer et al., 1999). Same is the case for Starwood looking to expand into Kazan. The two most important aspects that the expatriates will need to consider in this situation are the differing socio-cultural aspects of Kazan from other franchised markets as well as the flexible Strategic Human Resource Management (SHRM) and development policy that will be best suited for the region. Both these aspects will be discussed thoroughly later on.
Business leaders for Starwood enterprises all over the world are searching for methods to increase the amount of expatriates who complete international assignments successfully and stick with the organizational values following the completion to transfer knowledge and nurture a worldwide mind-set within the different franchises of the organization. Some businesses or franchises for Starwood have as many as 200 employees working abroad at a given time (Gregerson & Black, 1990). Based on Gregerson and Black, failures of those assignments range in expense from $55, 000 to $200, 000, necessary to replace one person, and expatriate assignment success rates are in times as little as 20%. A worst-case scenario predicated on Gregerson and Black's figures could imply that a business with 200 expatriates and an 80% failure rate may experience a loss between $11 million and $40 million largely because of poor choice of their expatriates. Based on most recent studies, proper choice of expatriates and their appropriate adjustment to the socio-cultural dynamics of the host country are paramount to successful completion of international assignments.
The objective of this paper is to analyze if there is any potential of Starwood hotel chain to expand their business into Kazan market. For this particular aspect, the paper will focus on, as aforementioned, the socio-cultural dynamics of the region as well as the appropriate SHRM policy. The paper's main focus will be on the data collection, analysis and interpretation of research findings which will, hence, make up a large portion of the paper.
Businesses which have expatriate employees should regard successful completion of expatriate assignments as the main human resource mission and an integral aspect of the corporate strategy. You could barely imagine a business spending the amounts stated above on a bit of equipment that consistently does not meet expectations (Black, 1990). To improve the potency of the expatriate employees and also to ensure better performing multinational strategies, multinational businesses started to focus heavily on a variety and retention criteria of such employees as a strategic business goal in reaction to the increasing requirement for expatriates in MNCs. However, the criteria usually utilized by most businesses to pick expatriate employees are successful job performance in your home country, in addition to technical and managerial skills. If your candidate for an overseas assignment qualifies when it comes to technical skills, some businesses then search for personality and over all fit, which, based on Jassawalla, Truglia, and Garvey (2004), should be the primary aspect as opposed to the secondary one. Jassawalla and his colleagues asserted the fact that personality characteristics, including adaptability, should be studied first in potential expatriates, followed closely by an analysis of those candidates' technical skills. Jassawalla and colleagues futher declared that mostly businesses in the hospitality industry don't consider individuals lacking the capability to adapt cross-culturally. Likewise, based on a recent study, willingness to work overseas and past performance in U.S.-based jobs are poor indicators of an expatriate's potential success. Due to the fact somebody is really a high-performance employee in the U.S. doesn't imply that person is going to be equally successful abroad, just like the process of a brand new country also come with a brand new set of challenges and new beliefs -- expanding and franchising also brings forth a new set of corporate cultures and attitudes about getting work done (Jassawalla et al., 2004). Researchers similarly suggested that emotional intelligence assessments be utilized as an initial step to make sure the only the successful expatriates are hired and kept. Despite these findings, many firms continue steadily to focus their selection criteria first on technical skills and willingness to go abroad instead of considering the capability to adapt and emotional intelligence (EI), followed closely by sufficient technical skills (Shaffer et al., 1999).
The internationalization of the hospitality industry has put increased demands on all relative businesses on a global front as well (Gregerson & Black, 1990). Consequently, employees are now being hired and delivered to foreign countries to complete and attain more knowledge or information on missions, including turning around projects or groups, being subject material experts, guaranteeing that home country principles and policies are adhered to, attaining international experience to use in other structures (including succession planning), and much more. The successes of expatriates in attaining the aims of the organization have grown to be critical to multinational companies' international proposals (Lillis and Tain, 2009).
Based on Jassawalla et al. (2004), while there are lots of facets that influence the failure of expatriate assignments, none does occur as frequently as do poor cross-cultural adaptation or adjustment of the employee to the host country. Cross-cultural adjustment is understood to be a procedure of adapting to living and being employed in a foreign culture (Lee, 2006). It's the familiarity and psychological comfort an individual has with working and residing in a foreign country (Lee, 2006). Employees who neglect to adjust to the culture of the host country may leave the organization. At exactly the same time, many such employees stay and continue to perform below par for the rest of the international assignment (Gregerson & Black, 1990). Poor cross-cultural adjustment hampers the end result of the international assignment and increases the chance that expatriates won't accomplish their goals, leading to failure of the assignment (Gregerson & Black, 1990). Cross-cultural adjustment comprises three dimensions: general adjustment (culture), work adjustment, and interaction adjustment (Gregerson & Black, 1990). There are lots of definitions of what failure of an expatriate constitutes. Failure is actually a consequence of the expatriate leaving the assignment early, failing woefully to meet performance standards, or maybe not sticking with the organization following the expatriate assignment to transfer knowledge. Based on Lillis and Tain (2009), the major reason behind failure of expatriate assignments may be the inability of the employee to adjust to the host culture.
Based on Jassawalla et al. (2004), for Starwood, picking expatriates with high emotional intelligence can improve expatriate success rates in Kazan somewhat by shortening their learning curve and helping with faster cross-cultural adjustment to the host country. Because employees with higher degrees of emotional intelligence are faster and much more efficient in cross-cultural adjustment, they experience success as expatriates more regularly and quickly (Lillis & Tain, 2009).
Background of the Study
Socio-cultural adjustment - Examples
The standard view regarding international modification or adjustment was that it had been a unitary phenomenon (Gullahorn and Gullahorn, 1962; Oberg, 1960); however, this idea was opposed by Black et al. (1991) who claimed this concept is really multidimensional and had three different factors. The 3 dimensions of international expatriate adjustment were distinguished as: (1) general non-work environment; (2) interaction with the host nationals outside work, and (3) nature of the work. The socio-cultural features compromised in the international adjustment were one of the main theoretical frameworks as well. Various empirical studies have supported this three-dimensional framework of socio-cultural adjustment (Black and Gregersen, 1990, 1991a, 1991b; Black and Stephens, 1989; McEvoy and Parker, 1995).
Just a few empirical studies are available concerning the Western business expatriates' work adjustment in the mainland Asian regions, especially in Russia. For example, it's been discussed by Bjorkman and Schaap (1994) that there exist certain issues in the shape of the expatriates who're employed in Western-Asian or Western-Middle East joint ventures. Additionally they submit certain guidelines to handle the problem. Effective intercultural interaction in Asian-U.S. joint ventures is analyzed by Davidson (1987). Davidson (1987) figured…
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