H&M's Expansion to Dubai Case Study Sample

Introduction To H&M's Expansion to Dubai

Every organization aims at diversify its business operation and expanding the organizational in other countries. While expanding company need to understand various factors such as financial and economic condition, political stability, social and cultural factors which are impacting the decision of the management. This report includes the cultural factors that are impacting the decision. H&M is well known organization, operating within fashion sector, providing quality clothing and accessories in various countries. They have created a brand value of 12.7 million U.S dollar in year 2022 (Brand value of H&M Company, 2022). The company is expanding its operation in Dubai by starting an outlet. This report includes all the cultural factors which are impacting the decision of manager. This includes the human resource management issue that is affecting the company decision related to the expansion. This report will also focus on identifying any other potential issues that could arise and various advantages that H&M going to enjoy from this expansion.

Section 1: Factors that influence mental health and wellbeing

HRM issues faced by H&M in opening outlet in Dubai

The HRM of the company aim at selecting, recruitment, maintaining and allocating the human resources at the best place which will help in attain the organizational goals. The current policy of HRM in H&M aims at recruiting people from the local areas so to benefit the people of the country. The company has policy regarding the human rights which focus on no scope for the forced employment or the child labor. Now the company is planning to expand in the Dubai, where the new Issues could be faced by them which are follows:

Employee's retention: Each company HRM focuses on lower the employee's turnover which helps in effective and efficient way of attaining the organizational goals. It has been identified from the research of more than 3000 professional, the employees in the Dubai's organizational does not work for the same company for the longer period of time. Where in H&M the retention of employee's data is effective as 81 out of 100 employees the company is able to retain (Employee's retention rate of H&M Company, 2023). This is the issue which the firm is going to face as they need to adopt strategies which can effective in lower the turnover. H&M should involve the Maslow's hierarchy of needs theory for the retention of the employees. This will help in identifying the basis need of the employees and find measure to fulfill their need. These will help in increasing the satisfaction of the employees in the organization.

(Source: Shaban, 2019)

HR compliance issue: There are specific set of rules and regulation formed in UAE. There are various rules for the labor law in the UAE which each company needs to follow. The law includes the restriction on the forced employment and discrimination on the basis of the gender, race, sex, religion (Lee, Jung and Ha-Brookshire, 2023). This made the working of the company easy as the firm is already following these rules and there is zero tolerance for the violation of law. The company is having advantage of this law as they have well established knowledge regarding the same and implementing the same in best possible way.

Attracting top talent: Every company aims at attracting the most effective and efficient worker which help in achieving the organization goals and improving the profitability of the firm (Kaner, 2021). Global company faces this issue as there as shortage of the talented employees and the demand of the same id increasing drastically which make it difficult to attract employees. The company will face problem in acquiring the talent employees and candidates form the markets and they need go through a long struggle to identify the same (Nikam, Lahoti and Ray, 2023). These will also increasing the cost of the organization and at initial level decreases the profit of the firm. From the critical point of view it is very important to attract the employees with the best and effective skills as this will be having positive impact on the success of the organization.

Recruitments of the employees: The government of UAE has paid focus on the involvement of local sponsors, manager and employees in the private organization. For H&M they should focus on recruiting the staff's members, investors and employees form the local resident. The government declares the reduction of foreign employees in each type of organization. This the advantage to the company as the HRM policy of the company is already focusing towards empowering the individual of the local area by making them financial stable. This HRM issue of the UAE will not affect the working of the HRM.

Low women participation: Existing number of employees in the H&M Company indicates that the company is mainly focus toward gender equality. They aim at reducing the gap between the males and female employees and focus on providing more job opportunity to women (Shaban, 2019). The data show that 63% of the total workforce is women but in UAE number of women employees is less. This will create the issue for the company to maintain their existing policy. They should design strategy to attract and retain high number of talented women employees.

Safety and security: With the changing environment the employees in the retail industry are more focused toward the safety rules and the companies' rules regarding the retention the employees. The UAE labor law clearly defines that the employment should be based on the fixed term employment so that employee fell secure toward their job (van Hoek, Gibsonand Johnson, 2020). The H&M Company does not follow this contact in all the other branches as this made the company forces to employ the worker at the time of low profits. This will create an issue for the company as they need comply with the law of the recruitment.

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Managing diversity: Individual in every country has different culture and belief which are impacting their behavior. The biggest issue which the HR management of the company face is to integrated the people from different cultural to work in a particular organization. The HR department has to identify the culture, ethical as well as the language barrier which are prevailing in the organization and the suitable action to eliminate the same. In H&M, which is planning to establish its operation in Dubai are needed to understand the cultural and the ethical belief the country (Sriyakul, et. al, 2019). They are focused toward employing local employees who make it difficult for the HR to establish a strong interpersonal relation between the employees of diverse cultural.

Change Management: It refer to the change in the demand and the needs of the employees in the organization which is uncertain and impact the company growth. The company need to find appropriate solution and the, assures through which the employs need are satisfy and the company need not incur in high cost because of these. The H&M Company need to identify the changes that are occurring in the workforce of the Dubai. Currently the workforce are only towards the financial incentive but the job environment impact the most in decided the location of the job so the company should focus on improving the working environment. The country has low retention rate so the company need to focus on improving the turnover of the employees.

Compensation Management: The human resource management of the company faces the biggest issue in the compensation management of the employees. Compensation is the financial incentive which helps in keeping the motivation level of the employee's under control. Effective compensation management helps in determining the factors through which the companies' employees could be retain (Abu, et.al, 2019). There is different needed and the desire of the population in different countries. The H&M Company should detail analysis the factors and the compensation which the employees in Dubai are expected from providing the service. The company should analysis the demand and the actual compensation and other benefits they could provide. This will help in identify the cost of the organization. The company should adopt the Equity theory of compensation in the company which emphasis on providing the effective wages to all the employees and non discrimination should be done on any basis.

Cultural issues on the H&M in starting the outlet in Dubai

Cultural palsy an important role in deciding the success of the organization,. Each country has different belief and the customs which global companies need to follow or the sustainable growth in the country. H&M culture aim at believing the people of the organization and aim at improving their performance by providing various opportunities. The culture issue which the H&M could face while expanding in Dubai are as follows:

Language barrier: There is different type opf language spoken in each country. The company aims at employing the local employees so that the language barrier within the store will not occur. But at the operation level it is not necessary that the efficient and skilled employees id able to be found by the company so they can appoint the person from other country as well (Moghazy, 2021). Generally all the communication in MNCs are taken through English language but all are not expert in English so this could create confusion for the employees and the accents also vary from the country to country. To cope up with this problem H&M should arrange training and language session so that there communication barrier could be minimize. From the critical point of view language barrier leads to create frustration, misunderstanding, conflicts and the decreasing the efficiency of the employees.

Religion difference: There is various type of religion in the world and everyone follow different type of religion. Conflicts could be occurring in the organization if the belief and customs of any religion are ignored. As the H&M is planning to expand in Islamic country they need to focus on all Islamic holiday and also focus on other religion (Bressanelli, Peronaand Saccani, 2019). The company should focused on reducing the situation of conflicts in the organization the company should focus on indulge with the local practices before determine the work requirement in the new locations. H&M should focus on creating awareness regarding the different cultural by conducting various session which help in identify the similarities between various religion in the world.

Taste and preference: There are different trends and the preference in the market which are leading to the provide goods and services accordingly, through which the needs of the population could be satisfy. As H&M deal in the cloth industry they should include the clothes which are more prefer and common in the country as this could help in increasing the sales. H&M will negatively impact from this factor of this cultural issue as taster and preference of the costumer keep on changing in the clothing industry (Martínez-Caro, Cegarra-Navarro. and Alfonso-Ruiz, 2020). This will impact the changes they need to bring in the collection of the clothes to become competitive in the market. In the clothing industry, taste and preference has great impact on the success of the organization. There is frequent change in the customer preference which will impact on the profitability of the H&M.

Labor demographics: The Company aims at employing the local resident of the area where the outlets are going to open. In the recent time the UAE population is largely includes Indian, Pakistani, Nepalese and Bangladeshi. So the company needs to understand the culture and religious belief of the entire citizen from the different country so that no confusion in the coordinate and cooperation could be generated (Javed, et. al, 2020). In UAE the company consists mainly of the young age employees the company should focus on providing training session regarding the cultural awareness so that they did not face any conflict in the coordination with different religious nard country citizen.

Attitude and behavior: As H&M planning to move into new market and in new country they should understand the attitude and behavior of the consumer in those areas. H&M should focus on bringing changes in the pricing strategy, marketing and the services sp that they can connect to the local people of that country. The customs, habits and preference of the people differ according to their country, so the H&M should modify its business model according to them so to attract customers. This will help in integrating the global ideas of the company with the local feature which will help in success of the expansion of business.

Not understanding the local Business practices: There are various differences in the political, economical, regulatory and cultural of the countries. For H&M to become successful they should fully understand the local market custom of the Dubai. This will help in understanding the marketing strategy which will be most effective and efficiency applicable in gaining large amount of costumers (Gigauri, 2020). The company should understand the stakeholders in that country and how t creates an attractive business plan to motivate them. This could be done deeply understand the mindset of different people in the market and how the currently working organization are using strategies.

Inability to adapt Human resource management to local market: Human resources play an important role in deciding the success of the organization. The company aims at employing people from the local areas so to provide financial support to the people of the country in which they are planning to expand their business operation. However, only recruitment will not be enough they should focus on implementing Human resources policies which are reflecting and supporting the cultural belief of the local employees (Gallardo-Gallardo, Thunnissen and Scullion, 2020).. The company should focus on identify the factors which are impacting the organizational commitment, satisfaction and motivation level of the employees.

Ineffective diversity management: It refers to as deeply analysis the difference in the people thought process and determine all the differences as valuable. Diversity management could efficient carry out by demoting exclusive and restricting discrimination at the work place. The company need to effectively management the diverse workforce as this will help in reducing the conflict among the team members and creating a good interpersonal relationship among superior and subordinate (Sharma, Adhikaryand Borah, 2020). If the company fails to effectively manage the diverse work force this lead to increasing the cost and the turnover of the company. They will not be able to retain nod attract the effective employees and eventually lead to decrease in the performance of the company. Contingency theory of the diversity management should be employed by the Company which helps in managing the culture and the organizational strategies.

Education: This is the factor which creates the cultural difference in the organization. To efficiently fit in the workplace environment the company should evaluate the educational level of employees at the work place. These lead to creation of the conflict among the employees in the organization as the same tasks could be understood in different manner by the individual according to their ability. H&M should clearly identify the education that they needed in the employees for the selection in the team.

Conclusion

It has been concluded from the report that cultural and human resource management issues are widely impacting the success if the organization. H&M is planning to expand its operation in Dubai so they need to understand all the cultural and ethical belief of the place and conduct a research to eliminate all the risk. It has been identified that H&M follow a system of zero tolerance for the forced employment which is positive factor as the Dubai labor law restrict prohibited the same. There is low retention rate in Dubai which makes it difficult for the company to retain and acquired talent staff. They need to formulate various financial and non financial strategies which help in lower turnover rate. The company aims at inclusion of the high number of women employees but the work ratio in Dubai for the women are low which will create issue for HRM. Under cultural issue the company is facing language barrier, religion difference, change in taste and preference, diversity management and the attitude and behavior as the crucial factor impacting the organization. This create barrier in the communication within the organization and create a conflict which hampers the working of the company. It has been identified that the company should undertake an indebt research which will help in determine all the factors in the country. These will also help H&M in modifying the current business plans and the model which will be appropriate according to the country's situation. This will help identify all the uncertainty and the issues which the company could and the appropriate solution of the same.

References

Books and Journals

• Gigauri, I., 2020. Organizational support to HRM in times of the COVID-19 pandemic crisis. European Journal of Marketing and Economics, 4(1), pp.16-30.
• Nikam, R.U., Lahoti, Y. and Ray, S., 2023. A Study of Need and Challenges of Human Resource Management in Start-up Companies. Mathematical Statistician and Engineering Applications, 72(1), pp.314-320.
• Gallardo-Gallardo, E., Thunnissen, M. and Scullion, H., 2020. Talent management: context matters. The International Journal of Human Resource Management, 31(4), pp.457-473.
• Shaban, S., 2019. Reviewing the concept of Green HRM (GHRM) and its application practices (Green Staffing) with suggested research agenda: A review from literature background and testing construction perspective. International Business Research, 12(5), pp.86-94.
• van Hoek, R., Gibson, B. and Johnson, M., 2020. Talent management for a post?COVID?19 supply chain—The critical role for managers. Journal of Business Logistics, 41(4), p.334.
• Sriyakul, T., Singsa, A., Sutduean, J. and Jermsittiparsert, K., 2019. Effect of cultural traits, leadership styles and commitment to change on supply chain operational excellence. Journal of Computational and Theoretical Nanoscience, 16(7), pp.2967-2974.
• Abu, F., Gholami, H., Saman, M.Z.M., Zakuan, N. and Streimikiene, D., 2019. The implementation of lean manufacturing in the furniture industry: A review and analysis on the motives, barriers, challenges, and the applications. Journal of cleaner production, 234, pp.660-680.
• Bressanelli, G., Perona, M. and Saccani, N., 2019. Challenges in supply chain redesign for the Circular Economy: a literature review and a multiple case study. International Journal of Production Research, 57(23), pp.7395-7422.
• Martínez-Caro, E., Cegarra-Navarro, J.G. and Alfonso-Ruiz, F.J., 2020. Digital technologies and firm performance: The role of digital organisational culture. Technological Forecasting and Social Change, 154, p.119962.
• Sharma, A., Adhikary, A. and Borah, S.B., 2020. Covid-19′ s impact on supply chain decisions: Strategic insights from NASDAQ 100 firms using Twitter data. Journal of business research, 117, pp.443-449.
• Lee, S.H., Jung, S. and Ha-Brookshire, J., 2023. " We are watching you": investigation of consumer-employee perception gaps and the employee expectations-employer performance gaps. Fashion and Textiles, 10(1), p.34.
• Javed, T., Yang, J., Gilal, W.G. and Gilal, N.G., 2020. The sustainability claims' impact on the consumer's green perception and behavioral intention: A case study of H&M. Advances in Management and Applied Economics, 10(2), pp.1-22.
• Moghazy, M., 2021. Teaching and Learning Arabic as a Second Language: A Case Study of Dubai. Teaching and Learning, 10(05), pp.52-61.
• Kaner, G., 2021. Greenwashing: how difficult it is to Be transparent to the consumer—H&M case study. Green Marketing in Emerging Markets: Strategic and Operational Perspectives, pp.203-226.

Online

• Brand value of H&M Company. 2022. [Online] Available through: < https://www.statista.com/statistics/980692/brand-value-of-h-and-m-worldwide/#:~:text=In%202022%2C%20the%20H%26M%20brand,billion%20U.S.%20dollars%20in%202017.>
• Employee's retention rate of H&M Company. 2023. [Online] Available through: < https://www.comparably.com/companies/h-m/retention#:~:text=H%26M%20Retention%20At%20a%20Glance,remained%20steady%20at%2071%2F100.>