Hrm380 Case Gfs China

Case 3

Steve Parker and GFS-China Technologies

Venture (B)

Group K

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Venture (B)

Group KGFS-China______________________________________

GFS-China Technologies was a joint venture between Standard Industries of the United States and Good Fortune Enterprises of China. They began operating in Huadong, China in September 2, 1996. The reason of establishing the venture was to manufacture various automotive heating ventilation and air conditioning (HVAC) parts. Standard Industries became interested in the Chinese automobile market because of the significant expected growth. So that they took the opportunity very well and signed an agreement of joint venture with the Good Fortune Enterprises.

The Early Situation________________________________

The negotiation of the joint venture was started in June 1995 and the two companies came into agreement in late August 1996. Good Fortune Enterprises was a large diversified Chinese company that contributed its automotive HVAC division to GFS-China. The venture equity split was 60% for Standard and 40% for Good Fortune. The board of the joint venture included three members from Standard and two from Good Fortune.

The Chinese automobile industry was in a volatile position when the joint venture began its business. Though more than 95% of Chinese production was by joint ventures between Chinese firms and the major international automobile producers, most of the foreign automobile firms in China were struggling. Shanghai VW was the only profitable joint venture in China and the only one to have achieved commercially viable level of production. Chinese government implemented some various laws to demotivate foreign joint ventures to come and do business in China. Despite the difficulties with over capacity and profits most industries including Standard believed that the China market was too important to ignore.

Yin Chung Li, the General Manager of GFS-China________

At the early stage of the joint venture, a Chinese manager named Yin Chung Li was hired as a general manager of the GFS-China. Yin firstly hired 20 employees including three managers; but the decision was strongly depreciated and stopped immediately by GFS-China. Good Fortune’s president Li Hong Tan demanded few things from Standard Industry’s Mark Hunt in GFS-China. There he wanted Mr. Yin to be replaced. Good Fortune desired that an American man to be the general manager

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Group Kof the venture. Mark Hunt was always ready to appoint a new general manager because MR. Yin was originally appointed by Joe Ryan. Several meetings between partners decided that the new manager would come from Standard. So Steve parker, who was the Asia Pacific purchasing manager for Standard HVAC, got the opportunity to fill the position of the general manager of the joint venture.

Steve Parker______________________________________

Steve Parker was a 32-year-old man with a superior career in automotive industry. He started his career with summer jobs in Ford Motor Company while attending Michigan State University on MIS. He worked as a manufacturing foreman in Ford plant for six years. After that he joined Standard Industries. He was eager to do jobs outside United States. So he was offered for a position of purchasing manager in China in 1995. He was not the man to ignore the opportunity of being appointed as a general manager of GFS-China.

The New General Manager__________________________

As the general manager of the GFS-China, Parker’s first meeting was on Monday, September 30, 1996 with the president of Good Fortune, Li Hong Tan in Huadong. He explained his position to Mr. Li that they want to make the joint venture a successful operation and take the relationship of the two partners into a superior position. Both the companies must establish a greater trust among themselves and step forward disregard to all the past discrepancies. Parker urged to compose this venture operation a successful one. He wanted to build a strong relationship with both Mr. Li and his son Li Chu Kang. Although Parker was hopeful about the relationship, he never relied on only the first impressions about anyone.

The Two General Managers Confronts_________________

On the very next day, Parker met with Mr. Yin Chung Li, the general manager of GFS-China. Parker was there to replace Mr. Yin. The replacement order was already known by Mr. Yin and that is why he was very upset. Mr. Yin planned a farewell party which was rejected by Parker. Parker preferred a written statement regarding the farewell instead of having a dinner due to inadequate funds.

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Venture (B)

Group K

Parker thought that Mr. Yin was not a man to trust. After examining the financial situation of GFS-China, his assumptions were proved true. Mr. Yin got annoyed at the behavior of Parker, and as a consequence they got involved in a brawl at Parker’s hotel room. Parker asked Yin to return all the items he bought with venture money. Few days later Yin left GFS-China and employed in Standard’s Beijing office, which he resigned the position within a few months. The sales manager was sacked by Parker who was lacking ability as a sales manager.

The Joint Venture in Business Again___________________

Parker’s foremost job was to restart the venture and ensure to protect Standard’s interests. He knew that his boss wanted that Standard would make all its negotiated contributions of equity and technology. Parker was also required to fulfill a list of requirements which included-

Good fortune had a viable business to contribute to the joint venture. The joint venture must become profitable. Technology and manufacturing capabilities should be upgraded to world-class

level.

How it Ran in Next Few Days_________________________

Few days later, an incident occurred which was never negotiated before. A consulting firm had been engaged to determine the financial viability of Good Fortune’s HVAC business. But Good Fortune’s management disagreed to provide sufficient information to them. Parker knew that he must establish the fact that the venture was a financial disaster otherwise his superiors would want to continue the business. Meanwhile Standard had some strategic reasons to keep on the joint venture.

Over the next few weeks, Parker went through all over the aspects of Good Fortune’s business. Parker faced some difficulties to build a good financial model due to some inconsistencies. He spent time in learning the business very well and also met with the managers individually to know their jobs. Parker identified two prime initiatives that were critical to achieve profitability. These included-

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Venture (B)

Group K Developing a new compressor product which will be supported by US

technology transfers from Standard’s U.S. operation. Combining all three plants into one in order to reduce costs.

Good Fortune’s Shortcomings________________________

Reviewing all the things, Parker realized that Good Fortune was not at all capable of building a new compressor even with technology transferred from Standard. Standard believed, when signing the contract, that an upgrade of the product would be reasonably eminence. At times, Parker realized that Good Fortune could not make any functional products. Opposing to the Standard’s, the products Good Fortune manufactures lack quality. So Parker prevented his boss to make any sort of payments before new product be produced.

Assistance from Standard____________________________

Teams of American engineers travelled to China over the next few months to support the new product development and combining three plants into one. Standard paid the cost of the engineering teams. As a result, an efficient and organized plant was established. It saves the rent much and also allows Good Fortune to rent the excess space to other tenants.

The Joint Venture Starts Again_______________________

It took almost 1 year to restart the venture operations. Good Fortune was able to manufacture a new compressor and so Standard paid the $10 million to Good Fortune as negotiated. Five of the 20 employees hired by Mr. Yin resigned their jobs. The venture was run by other original managers, which includes the CFO also refusing Good Fortune’s request to replace him.

Within the first two months of restarting the business, the joint venture lost a significant amount due to economic turn-down. They anticipated on the higher sales but they must run the business solely on the cash flow. This was only because they had a burden of huge account receivables.

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Venture (B)

Group K. . . And a Great Blow Took Place_____________________

Although the joint venture was able to build a new compressor, they launched it very lately. By the time, other competitors had congealed their positions and promoted their product successfully in the market. As a result, GFS-China was forced to launch their product with a lower price. Furthermore the president of Good Fortune, Mr. Li Hong Tan passed away in December 1998 and the position was filled by his son, the twin brother of Li Chu Kang. But the deputy general manager of GFS-China was very much infamous for drinking and passing time in jail for gambling. Most of the original management team quit between 1997 and 1999. The predetermined profit target was not also met by the time which leads to a disagreement of Standard to make full payment.

The Purchasing Department and Mr. Boon in Spotlight______

The purchasing department of GFS-China was very convoluted and bureaucracy was all around. Suppliers were not offering the best purchasing condition. This was one of the major concerns of Parker. The contract of the joint venture was not satisfying to Parker and he recommended some changes in the purchasing department.

The purchasing manager, Mr. Boon Choo Yong, was found out to be a desperado by Mr. Parker. Boon owned his own car which was priced more than 3 times than his annual salary. He was asked to explain his owning a posh car like that but failed to defend himself. Some companies were paid the payables in cash where other payables had to be extended. Parker was convinced at Boon that he was making personal profits from purchasing relationship.

The Dilemma_____________________________________

Parker was facing tight spot with both the individuals inside the company and dealing with Good Fortune. Individuals inside the company used company money to enrich themselves in some illegal ways which increased the cost for the company. Good Fortune was indifferent about the problems of purchasing issue. Parker observed that dirty practice is the only way to do business in China. He also realized that there were very powerful people in Good Fortune and firing them would be very tough for him.

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Venture (B)

Group K

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Group KOptions in Hand___________________________________

Parker had sorted out four options for him regarding Boon. Those are given below-

1. Confront Boon and insist the competitive sourcing he implemented.2. Changing Boon’s behavior though training.3. Recommend changes to the joint venture board.4. Ignore the overall situation an attempt cost cutting in other areas.

The entire situation was troubling for Parker. He had never been a general manager before and so lacked experience in solving some serious problems. The joint venture was also very difficult to manage in a country like China where everyone seeks for dishonesty. Parker indicated some severe problems but implementing the solutions was not easy for him.

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Venture (B)

Group K

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Venture (B)

Group KWe have identified some problems in the case of GFS-China joint venture. Those problems are listed below-

Standard came forward to form a joint venture with Good Fortune but they did not thought about what will happen to the venture in a very volatile situation which they actually faced.

The early general manager of the joint venture, Yin Chung Li, was not an upright man and he was found to use company money for personal need.

Though it was a joint venture, Good Fortune’s manager was not always providing enough information which, at last, leads to a financial disaster.

Good Fortune lacks ability to build quality products even with the technology transferred from Standard. So Standard delayed all sorts of payments as contracted.

Even after Good Fortune manufactured a compressor, they were forced to launch with a lower price due to delay.

Subsequent to the passing away of president of Good Fortune, Mr. Li Hong Tan, his son took his place and he was found out to be a wrong guy for that position.

The raw materials they were acquiring from the suppliers were not also offering the best combination of price and quality and the dubious purchasing practices was there.

The purchasing manager Mr. Boon Choo Yong was also caught red-handed to Parker as a result of making personal profit from purchasing relationship.

The entire business situation was troubling in China.

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Venture (B)

Group K

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Venture (B)

Group KIs it possible for the joint venture of Good Fortune and Standard to run a sound business with a satisfactory profit margin despite of having many unethical practices and negative HR issue?

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Venture (B)

Group K

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Venture (B)

Group K

SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a business venture. It involves specifying the objective of the business venture and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. A SWOT analysis may be incorporated into the strategic planning model. So it provides the basic information required to do any sort of analysis. The main objective of SWOT Analysis is to apply conversion strategies to convert weaknesses or threats into strengths or opportunities. If the threats or weaknesses cannot be converted a company should try to minimize or avoid them.

Strengths________________________________________

Strengths are the internal powers of the company. How well the company is organized is described through strengths. The strengths of this case is listed below.

1. GFS-China is a joint venture.

Standard Industries and Good Fortune Enterprises came into an agreement and establish a joint venture named GFS-China.

GFS-China is a joint venture between Standard Industries of United States and Good Fortune Enterprises of China. Two companies from two different countries unite together in order to form a fantastic business prospect. Standard saw good business condition in China and came into an agreement with Good Fortune to manufacture various automotive heating ventilation and air conditioning parts. Moreover Standard could have profound managers who would be very competent in running any sort of business.

2. They are financially solvent than the other local manufacturers which is a great strength for running.

The US company Standard had the adequate resources and funding to run a venture operation in China while most of the other companies did not had at that period of time.

As a joint venture, they had more resources than any other local manufacturers of HVAC. Standard Industries is from United States which is one of the richest countries in the entire world. The top management was very solvent financially who could invest the needed amount for running a successful joint venture. They could enlarge their profits if they could successfully capitalize on the resources of Standard and low production costs of China.

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Venture (B)

Group K

3. The joint venture has a great support of using new and advanced US technology provided by Standard.

Standard Industries had access to every up-to-date technology in the market to use for production factories in China.

GFS-China was started for producing automotive heating ventilation and air conditioning parts. Standard wanted Good Fortune to employ labors and manufacture these compressors and other conditioning parts. Standard was ready to provide integrated and hi-tech machineries for manufacturing. As per contract, GFS-China could use any advanced technology and also funding for maintenance from Standard.

4. GFS China has the strength of diversified HR assets of both domestic and expatriate employees.

Employers and employees from two different countries cane to form a business organization. They can share the culture, knowledge and other things in order to develop each other in certain areas.

Standard Industries could engage proficient management team in the joint venture. Managers and employees from both US and China could make up an extraordinary lineup of human resources. Diversified human resource is a great advantage for any business. Employees from different countries would enrich themselves with knowledge, ability, skills and deftness. This was strengths for the joint venture.

Weaknesses______________________________________

Weakness is an internal issue of the company. In this section, all the deficiencies of the company are written. Here is a list of weaknesses of GFS-China

1. The organization had many negative HR issues.

GFS China had many negative HR issues like having no proper procedure of recruitment, absence of a proper compensation system, no performance appraisal system etc. Many adverse effects were there in the organization for this reason.

As there was no HR department in GFS China, there were many HR issues which were arising at a very alarming rate. There were no proper procedures of recruitment there. As a result, employees were being hiring based on personal relationship rather than considering their educational qualifications, eligibility etc. That’s why a sales person of suit buttons were employed there as a sales manager. That wasn’t all. There

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Venture (B)

Group Kwas no well defined compensation package. As a consequence, the salary of the Deputy General Manager, Li Chu Kang was increased from $300 to $3000 per month without any valid explanation. Moreover, the organization didn’t have any effective performance appraisal system to monitor the employees’ performance. That’s why many employees were involved in unethical practices like getting benefitted by organization’s purchasing system and so forth.

2. There was a lack of the feeling of organizational citizenship among many GFS China employees.

Many employees of GFS China were involved in many unethical practices which were against the professionalism and it was very harmful for the organization. Those employees were more concerned about their own personal interest rather than organizational interest.

The employees of GFS China were involved in many unethical activities. They were giving the priority of their own betterment rather than the company itself. The former general manager, Mr. Yin Chung Li was very corrupted and he used to take away the company goods and supplies like luggage and computers. He employed many people in the organization whom were not qualified to do the job at all. There were an inappropriate raise in Mr. Li Chu Kang’s salary without any explanation. Purchasing manager Mr. Boon was getting benefitted from the purchase system whose annual salary was $3000, but he was using a car worth $10000. These incidents refer nothing but the lack of employees’ feeling of organizational citizenship. They were treating themselves as a different part from the organization and they were abusing the resources of the company. Clearly it is very harmful for an organization.

3. GFS China had an inappropriate purchasing system.

For the supply of many parts and raw materials, GFS China used to practice some outsourcing to other companies. In spite of having competitive price and good quality of these supplies, some employees were engaged in purchasing higher priced and lower quality materials to make their own cash.

GFS China was a manufacturer of compressors which has a huge demand in the market. But due to unethical purchasing practices, leakage of manufactured products, and many corruptions, the company was drowning into more and more loss rather than making profits. Purchasing manager, Mr. Boon was a corrupted person who was getting benefitted by the company’s purchase system. Instead of going for lower quoted prices with better quality, GFS was outsourcing the work to a questionable organization with an active involvement of Mr. Boon. This purchasing behavior was responsible for company’s cost increase as well as the manufactured products was of lower qualities which were the perfect mismatch with Standard’s quality just because of lower quality raw materials. Maybe it was bringing the betterment of Mr. Boon, but

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Venture (B)

Group Kthe company was gradually losing its image, market as well as customers, and the image of renowned joint venture.

4. There was no fully functional Finance department in GFS-China.

There was no transparency in the financial data of GFS - China. It was hard to get the financial data of the company because there was no accessibility to get the sufficient financial data of Good Fortune. This was just because the Good Fortune management kept refusing to disclose those data. Steve Parker suspected of a financial disaster for this conspiracy. So he tried to get the financial data just depending on the purchasing requirements and customer contracts.

Employees of Good Fortune were involved in many unethical practices which were included the inappropriate utilization of organizational resources. That's why they kept refusing the consulting firm from Shanghai to check the financial data of Good Fortune for examining the financial viability of the joint venture. Even there were no formal purchasing contracts of customers to determine the exact situation though there were 40 of them. With this little help, Parker was able to demonstrate a little concrete financial model. The company was suffering from the shortage capital, but none other than Steve Parker was able to realize and control the situation. The average collection period was as high as 350days. But there were no active financial department to analyze the gravity of the situation and preparing a remedy for it. Though, some managers were trying to pay in cash maybe for their own benefit which was going to make the working capital shortage situation worse.

Opportunities_____________________________________

Opportunity is any external circumstance or characteristic which favors the demand of the system or where the system is enjoying a competitive advantage. For GFS-China, there are so many opportunities available. If they properly utilize their opportunities, they might become one of the leading business firms in the competitive world of business.

1. With GFS-China’s international joint venture image, their products will have the preference than local goods as the customers like to think themselves as global citizen.

GFS-China has a positive impact because of being an international joint venture. Customers always like buy products of this kind of companies because they always prefer brand images.

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Venture (B)

Group KGFS-China is a joint venture of Standard and Good Fortune Company. Both of them are popular enough at their place. So, it can be said that it is a very big and diversified business opportunity for GFS-China because they already have personal consumers and customers who will prefer them now more than before because they are now become joint venture and their capability to serve more has increased. The name GFS-China become like brand name. So, people would like to buy products of this company which has more popularity and positive word of mouth; even if it demands high price for their product. GFS-China can take this as their opportunity and make their business more profitable.

2. For the combination of GFS-China’s ability of bulk production and the Standard’s high end technology, they have the opportunity to lead the market.

For any business firm, huge production ability and technological advancement- both are very crucial issues. GFS-China is very lucky to have both of them n an appropriate manner. It is really a great opportunity for them.

According to the case, we know that Good Fortune and Standard- both companies were well establish but in two different ways. Good Fortune had huge production capability but it was not rich in case of technology. On the other hand, Standard was forward in the way of technology, but it did not have such a huge productivity as Good Fortune. So, when they become joint venture and made GFS-China, they covered each-others requirements. Their combination is like made for each other and it can be a tremendous opportunity if they use their ability.

3. With the help of Standard’s experienced and concerned manager like Steve Parker, GFS-China can improve its corrupted environment and HR issues which is very important for the organization.

A good employee like Mr. Parker is like an asset for his company who can make his company proud by doing good tasks. So, people like Mr. Parker can bring lots of opportunities to GFS-China.

A good employee can change the company situation by his industry, loyalty and responsible activities. If GFS-China recruits more honest and responsible employees like Mr. Parker, they might get a good job environment where everything will be under discipline. In this way, all the employee might do their work with own responsibility. So, the productivity will goes up. So, to be more benefited and make company’s job environment out of corruption, people like Mr. Parker is really important and their responsible activities might change the job environment of GFS-China. So, it can open a path of opportunity and prosperity for GFS-China.

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Venture (B)

Group K4. China has a large market with huge population and great demand.

Population is a great factor to a business firm. If GFS-China can use this factor for the betterment of its business, it will open a path of great opportunity to them.

China is one of the biggest countries in the world. If GFS-China can set up so many branches of their company in the different areas of China, they might get a huge population as their customer. In that way they might be beneficial and can reach their customers demand. If they consider the maximum population as their customer, the can earn more profit. Because the more population they have, there will be more cars, refrigerators, air conditioners etc. electronic materials. The more these materials increase, the more demand of compressor will increase. And the more compressors GFS-China can sell the more profit they can earn.

Threats_________________________________________

Threat is a challenge of an unfavorable trend or of any external circumstance which will unfavorably influence the position of the system. For GFS-China, there are some issues which can be considered as threat are given below-

1. GFS-China had no focus on the right customers.

GFS-China had a negative impact among its customers because it does not maintain a routine and official contact with its customer. As a result, customers do not pay an interest to GFS-China and its products.

GFS-China does not stay connected with their Customers are the main external factor for any business organization. if a customer is not satisfied with any company’s product or does not familiar about the product or service of a company, it will a matter of massive loss for the company. According to the case, we know that, 40 customers have no contact with GFS-China. So, if it continues for some more time, it is going to be the greatest threat for GFS-China; because if a negative word of mouth spread all over in the market place, it might affect the productivity of GFS-China. If productivity decreases, the financial situation will automatically goes downward. If the productivity goes downward, the entire business will be at risk. So, to survive in this competitive world, GFS-China has to maintain a good relationship with each and every customer.

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Venture (B)

Group K2. The company was running with an insufficient cash flow which may guide

them to bankruptcy.

GFS-China did not have adequate cash flow for future investment. So, in future, lack of resource might affect their business in a very bad manner.

Due to the negligence at work and practice of unlawful activities of employees, GFS-China has lost so many company resources. Employees including top management used to use company resources and other materials for their personal use. They even have selected suppliers and they are also corrupted. So, because of these issues, GFS-China facing problem regarding money and if these problems continues for more time, the company will bankrupt due to insufficient resource.

3. Top level employees, who had a greater hold on the company was not sincere about the company and the venture lack honesty among the employees.

So many good managers left and were willing to leave GFS-China because they were not satisfied with the corrupted and indiscipline environment of GFS-China. Lack of those honest and responsible managers was a matter of threat for the organization.

Most of the employees of GFS-China practiced unlawful acts. That is why honest and responsible employees will become fed up and left the job for their betterment. The management of GFS-Ch1ina also practiced hiring and compensating those employees with whom they have personal relationship even they did not deserve that. So, this is a kind of an insult to other responsible and active employees. In this way those responsible and active employees became dissatisfied and try to leave the job whenever they got another option. Lack of good and honest employees will made GFS-China so weak that it might not be able to deal with the competitive world. Rest of the greedy and irresponsible employee used rest of the resources for their own benefit. As a result, the company will be bankrupt.

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Venture (B)

Group K

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Venture (B)

Group K

Human resource issues have always been very vital to organizations that have been successfully able to maintain a good position in the market and good reputation as well. HRM is the process of acquiring, training, appraising and compensating employees. Human Resource Management helps build competitive advantage by developing their human capital. HR is also important for to maintain good quality for long period and it also explain how a company can retain good employee by giving incentives, bonuses, reward, and great compensation to sustain its quality service. This can be better explained by the fact when, HR handles the execution of most firms downsizing and restructuring strategies. HR manager can also help in the formulating of strategy, which requires the identification of the strengths, weaknesses, external opportunities and many more.

HR Issue 01 ______________________________________

GFS china does not have an integrated Human Resource Department.

Human resource issues are very crucial factors for any organization in this world. HR issues refer to policies, practices and employees attitudes toward their jobs. Analyzing and designing work ,determining human resource needs ,hiring effective employees ,selecting employees for required position ,train the hired employees for efficient working ,rewarding employees ,evaluating employees performance and giving them feedback ,and also creating positive work environment all of these things are HR issues. According to this case there is no integrated HR department which actually plays the part of controlling and maintaining the whole organization .The major responsibility of HR department is to make job analysis to understand the requirement of of the job and the requirement of any person inside an organization.

HR Issue 02 ______________________________________

GFS China needs to employ eligible employees by proper recruitment process rather than considering personal relationship or personal interest.

In this case, the company GFS china; joint venture of Standard and Good Fortune ; don’t have any HR department. So there is no specific recruitment and selection process. There is actually no standard of hiring employee’s, for that we can see that the companies production manager Boon Chu Yong who was before the driver of Goodfortune’s President. After Li Hong Tan’s death his position of of presidency was taken away by his twin son’s who has already the repuation of having in jail and being drunker. They basically hired people based on the existing personal relationship not based on the qualification and the quality. As it is a joint venture so both party

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Venture (B)

Group Kwanted to hire each party’s decided employee’s so that they can establish superiority over each other. For that reason, when Parker arrive he fires the employee’s who were hired by Yin Chu Lee the ex general manager.

HR Issue 03 ______________________________________

In the company GFS China, employees were compensated in an inappropriate manner.

There were no specific compensation and benefit packages based on the standard of living and along with employee’s performance level ; that’s why we can see that GFS china’s general manager’s salary suddenly increased from $100 to $3000 per month. So, employees must be paid as per the set business policy and the rules of the human resource department. Proper Compensation has to be designed as there was imbalance among the salary and benefits issue and might create inequity problem.

HR Issue 04 ______________________________________

GFS china didn’t provide any training to their employees.

Training and development is also one of the most important factor issues of human resource. In different organization which have HR department they ensure the requirement of training and development activites, so that they can make the employee learn to do his job properly. But in GFS china to increse the productivity hired employee’s didn’t get any training session. The purchasing manager , Boon Choo Yong was corrupted person so he should change behavior through training on competitive sourcing. Employee’s were producing and marketing defective pieces of products. But there were no one to find out the reason and provide any sort of development programs.

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Venture (B)

Group KHR Issue 05 ______________________________________

GFS china does not have any performance appraisal system to monitor or evaluate the employees.

In GFS china , nobody was there to measure employees performance as well. If the employees do not work properly, it is the company which affects much. The managers were already corrupted so that they were so busy in maintaing their own interst rather than the company’s. So they did not bother to measure the performance of their subordinates or workers. And there were no one who could measure the performance of the managers. As a result, so many unethical issues were going on there.

Some people might consider bonuses as a benefit, rather than a form of compensation. Some programs include a base pay and a variable pay. Satisfied workers can make a well established industry. Building an industry takes many years, so sustain and improve garment industry needs proper care. Wage issues should be solved by supplier and buyers. And government has to ensure the presence of labor representative. Here profit sharing and bonus sharing plan has to be equity based and all the employees whether they are wage earners or the salaried workers. So, employees must be paid as per the set business policy and the rules of the human resource department.

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Venture (B)

Group K

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Venture (B)

Group KAfter analyzing the case and HR Issues effectively in the previous part; it is the time to offer some recommendations on this particular case. Recommendations are proposals for the welfare of the company as a whole. GFS-China is a very well known company but there is some lacking we found in many sectors of this company. So, to survive in this competitive market with maintaining such a good condition, they have to follow such recommendations. Focusing on HR related issues identified in the previous part, now we are going to recommend some solutions that will support the efforts of quality enhancement of their services. By adopting our recommendation, we believe that GFS-China overcome its problems whatever it has. And by following the certain suggestions they might increase their market value. Here, at first we will mention ‘what’ are the specific problems we have identified and then what our recommendation to solve the problem, and why those are important for the betterment of the company. Our recommendation is applicable for both the top management and other employees related with this company. In this recommendation part, the scope of discussion is mostly confined within the WHAT and WHY (reason) parts of suggested activities this company must undertake in order to encounter prevailing challenges. After that, in the subsequent implementation section of the report, it will be discussed elaborately that ‘how’ that can be done, along with ‘what else’ will be necessary to make them successful and effective.

Problem 01_______________________________________

GFS-China does not have an integrated Human Resource Department.

According to the case and HR issues, we have come up with that there is no intigrated Human Resource Management Department in GFS-China. Their negligence at work, practice of so many unethical issues, etc. gives the prove of their shortage of strong and active HR department.

Recommendation 01

GFS-China should set up a fully functional Human Resource Department to deal with HR areas.

GFS-China should establish an integrated HR department to set up some rules and regulation to keep employees in discipline and remove unlawful activities and negligence at work from the company.

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Venture (B)

Group KJustification

This is an era of Human Resource Management which is essential to manage any kind of organization with a certain manner because it is a heart of any certain organization. So, not having a formal and strong HR department is like a curse for any organization. Moreover, it is so necessary in the case of recruiting and selecting deserving candidates of any organization. Under the control of HR department, GFS-China may have to create recruitment and selection committee consists of some experienced and loyal executives for their venture, who have the experience to work as a HR manager or line manager and can handle any unexpected issues, understand his responsibility and work for the organization towards gaining profit and bear the responsibility to maintain the whole HR process. They will hire new and suitable employees for the betterment of the organization. They will do so because they know which candidate to choose or not more than anyone else. In this way, GFS-China can be able to find an asset in the form of their employee.

Problem 02_______________________________________

GFS-China needs to employ eligible employees by proper recruitment process rather than considering personal relationship or personal interest.

GFS-China does not have a reliable and adequate number of people who are loyal to their company. Top management people hire employees considering personal relationship, who were not reliable and appropriate for do the job. So, here, recruitment process regarding personal relationship proved wrong.

Recommendation 02

GFS China should recruit the employees properly by considering the eligibility and qualifications of the candidates and recruit them by following the organizational rules and regulations according to HR Department’s requirements.

GFS-China must set up and follow the organizational rules and regulations to keep control over the entire recruitment and selection process and should recruit and select employees based on their quality, not based on any personal relationship.

Justification

Recruitment is a very crutial matter for any organization because it is a process which refers to the process of attracting, screening, and selecting qualified people for a job at an organization. GFS-China took so many people as their employees who were not

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Venture (B)

Group Kthe deserving one, but they got the job due to the reference. Every company should hire a candidate based on their ability, experience and quality. Organizational rules are given for the betterment of the organization. Ethics in the workplace help the organization to grow and prosper. A workplace being the source of bread and butter for many also satisfies the self-actualization needs. So, to behave ethically is beneficial for all the employees. So, the people of GFS-China should concentrate more on hiring right person for their company for the betterment of GFS-China.

Problem03________________________________________


GFS-China does not have any proper system of employee pay method. For this reason, employees are not satisfied with the company and involved in various types of illegal activities.

Recommendation 03

GFS-China needs to establish proper compensation package to increase productivity and motivate their people which should be along to the company’s specific HR policy.

GFS-China has no standard compensation package to motivate employees. So, it should establish proper compensation package to motivate their people and also increase work efficiency.

Justification

A better compensation not only helps to upgrade someone’s living style but also it shows his quality, ability and popularity in the job market. Due to better compensation, an employee must give his loyalty, full capability and industry at his job sector because it makes them feel that they can do something. It creates competition among employees which is beneficial for the company because when an employee works with his best ability and dignity, company’s productivity goes up. On the other hand, paying less can be the reason of employee turnover. So, GFS-China must establish a good and proper compensation package to motivate its employee and get the full capability from them and increase its productivity.

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Venture (B)

Group KProblem 04_______________________________________

GFS-China didn’t provide any training to their employees.

According to the case, we have come to know that GFS-China does not have an intigrated HRM Department. Due to the absence of this certain department, employees of GFS-China is deprived of necessary training and development programs.

Recommendation 04

GFS-China should offer sufficient training and development program for its employees so that their work will be more perfect, ethical and beneficial for the company.

To make employees responsible and perfect on their job, GFS-China should provide its employees with proper training and development program to increase their job efficiency.

Justification

Training and development programs are one of the most important issues in anyone’s career. No one can be perfect from the beginning. So, to build its employees perfectly, GFS-China should offer sufficient training and development program. Having a good training, an employee should be able to work with more confidence; perfection and knowledge because training is the process of providing employees with KSA (Knowledge, Skills and Attitudes) which they need to successfully perform their work. So, to get the full effort from the employees, GFS-China should offer sufficient training and development programs. In this way GFS-China should have concern about the intention of corrupted people like Mr. Boon. So, it might take necessary action against such corruption and improve their ethical standard. In this way, they might become serious about their job responsibilities and should work for company’s betterment.

Problem 05_______________________________________

GFS-China does not have any performance appraisal system to monitor or evaluate the employees.

According to the case, GFS-China has faced lots of troubles due to the bad performance and unlawful activities of employees. This is the proof of lack of GFS-

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Venture (B)

Group KChina’s weak performance appraisal system. They do not monitor their employees properly so that they get the scope of doing wrong things.

Recommendation 05

GFS-China should have a proper performance appraisal system so that it can evaluate the performance of the employees from the top level to the blue collars just to ensure the quality of their work and to ensure the accountancy to the organization.

GFS-China should establish a proper performance appraisal system for its all kind of employees. Employees should do their job with a correct manner to increase productivity of GFS-China under proper performance appraisal system.

Justification

Performance appraisal is a process that identifies, evaluates and develops employee performance to meet employee and organizational goal. For any organization it is mandatory to monitor and evaluate the performance of employees because if a company has good performance appraisal system, its employees get the pressure to do their jobs in an appropriate way. It is another way to motivate employees. It enhances the quality of their work. So, GFS-China should establish a good and proper performance appraisal system for their betterment.

Problem 06_______________________________________

GFS-China needs well organized Finance Department.

According to the case, after examin the financial situation of GFS-China, Parker realized that Mr.Yin used the venture money for his personnal purpose. Good Fortune company had no sufficient cashflow but they were dealing each and every task with liquid money because their so called wel known and selected suppliers are suffering from the lack of insufficient cashflow. So, they were not keep their attention on company’s welfare. So, this issue proves that GFS-China has no effective Finance department, because it is the duty of Finance department to take care of company resources.

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Venture (B)

Group KRecommendation 06

GFS-China should have an effective and strong finance and marketing department.

Finance is very important for GFS-China. According to the case, employees of GFS-China are involved with many unlawful activities and make a misuse of company resource. This problem occurred due to the negligence of Finance department.

Justification

For GFS-China, an effective Finance department is important to ensure that there are adequate funds available to acquire the resources needed to help the organization achieve its objectives; to ensure costs are controlled; to ensure adequate cash flow; and to establish and control profitability levels. Moreover, company resource is one of the most serious issues which have a powerful impact on any kind of business. So, the company with a weak Finance department faces tremendous problem in this competitive era. That is why; GFS-China has to assemble a strong Finance department so that they become able to do new, creative task but paying less amount of money and keep safe company resources.

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Venture (B)

Group K

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Venture (B)

Group KAs per the case analysis, we have discussed about some points of recommendation regarding the well being of the joint venture organizations for their sustainable growth in this highly competitive market by solving its weak points or problems, HR issues and so forth. To meet the organizational goals and mission, it is important to have a sound human resource management system in any organization; the joint venture of GFS China and Standard is not exceptional from it. Moreover, the implementation of the plans for sustaining in this highly competitive market with a remote problematic joint venture is also a challenge to continue its works with generating revenue as well.

This implementation section that we are going to describe will basically cover these areas:

Problem 01 _______________________________________

GFS china does not have an integrated Human Resource Department.

Recommendation 01

GFS-China should set up a fully functional Human Resource Department to deal with HR areas.

How it would be implemented?

As there is no mention of an active HR department in the case, we are assuming that they don’t have any HR department in their China office. They must open a new HR department for better service and production. In this competitive era, anything can be copied and anything which is now “your invention” could be others in a moment without the human resources, where it can’t be copied but can be nurtured as distinctive assets for the organization.

We have suggested them to open a HR department where they have to create a Recruitment and Selection committee to recruit the right talents for producing their high quality productions without any compromise. The committee must have a panel of experienced and loyal employees who can assure that the organization is having the very best talent of the market who will further improve the productivity and can adopt the new technology. Also, a HR department is also needed for handling any arising HR issues because any disruption can hamper the environment of innovation and

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Venture (B)

Group Kproduction. For recruiting the employees for new HR Department, they can follow these steps:

They can conduct planning and forecasting to determine the positions to fill in accordance with the duty and job description and specification with the qualifications to fulfill the recruitments.

They can put the recruitment advertisement on TV, online, newspapers etc for attracting external candidates, or for internal recruiting they can post it office notice board or newsletters.

Then they can build a pool of qualified candidates from internal or external sources.

Then they can screen out all the applicant’s applications by themselves or they can give this responsibility to other third party organization on behalf of them.

As the next step they can utilize many selection tests like written tests, medical test, analytical ability, creativity check etc.

Then they can arrange interview to find out the right person for the job.

By these steps, they can open a new HR department in their organization by placing the all new employees in their deserved rank or post according to qualification.

Who would implement it?

The right and responsible person from top management will implement the plan of establishing the new HR department, and they will also designate the newly hired HR employees in a proper manner with the right positions.

Where it would be implemented?

The place where the plan of establishing new HR department would be implemented is to an important issue for GFS-China. As it an international venture and Good Fortune didn’t have any HR Department, it is really easy to determine that they will establish it in their China office, Good Fortune.

When it would be implemented?

Implementing any plan without proper timing has no value. So Good Fortune has to be concerned that currently they have no HR department, so they have to open it as soon as possible. They must come up with a specific date to establish it in a nearby future after completing all the preparation regarding it.

Problem 02____________________________________

GFS-China needs to employ eligible employees by proper recruitment process rather than considering personal relationship or personal interest.

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Venture (B)

Group K

Recommendation 02

GFS China should recruit the employees properly by considering the eligibility and qualifications of the candidates and recruit them by following the organizational rules and regulations or according to HR Department’s requirements.


We have suggested them to open a HR department where they have to create a Recruitment and Selection committee to recruit the right talents for producing their high quality productions without any compromise. The committee must have a panel of experienced and loyal employees who can assure that the organization is having the very best talent of the market who will further improve the productivity and can adopt the new technology. . So everything would be in a systematic way and under the supervision of HR Department. They can follow the following steps like:

At first they have to develop a pool of qualified applicants, not anyone who is personally related. Then they have to optimize the size of the pool, but the number will be higher than the available position. Then they can offer honest and candid assessment to the prospective.

The recruitment and selection process do the job to ensure a proper recruitment process that the organization is getting the right eligible candidates that they are searching.


The HR department of GFS-China will implement it under a careful monitoring and supervision process. Where it would be implemented?

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Venture (B)

Group KIt’ll be implemented in the China office of the joint venture of GFS-China because the organization lacks proper process of recruitment.


It’ll be implemented after the establishment of the HR department of GFS-China. And it have to be very soon because the situation is getting worse there.

Problem 03 _______________________________________


Recommendation 03

GFS-China needs to establish proper compensation package to increase productivity and motivate their people which should be along to the company’s specific HR policy.


Compensation is the reward for performance. If anyone doesn’t get what they deserve, they would be demotivated and the work quality would go down. So we can say, a proper compensation package is a vital source of motivation. The compensation package can be different in nature, because all the employees don’t work in a same level and they don’t have the same capacity or knowledge. So while designing compensation structure or plan, we can consider the following table:

The company GFS-China can set up a compensation plan including the direct and indirect compensation. In the direct compensation section, for the base pay, they can offer:

Wages – That are calculated by multiplying the number of hours worked by the agreed hourly rate of pay. This can be applicable for the workers of Good Fortune.

Salary – Salary is the total monthly or annual paid for performing the job. This is applicable for the exempted employees of Good Fortune.

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Venture (B)

Group KGood Fortune could establish the “Performance Oriented Compensation Philosophy”, where there will be no guaranteed compensation or increase without performing. GFS-China could offer some performance based pay for their exempted and non-exempted employees, for both employees and workers. We are suggesting some of them:

For the “White Collar” employees, they can offer the following types of compensations:

Employee Stock Ownership Plan: Employees will receive company stock or share as a reward. The value or number of shares will depend on employee performance, contribution, commitment, etc.

Profit sharing plan: Employer will pay the employees a share of the company’s profit annually in addition to their base salary.

Perquisites: An extra benefit that may or may not have any direct financial value but is considered to be an important reward by employees, such as company car, club membership, parking facility, office decor etc.

For the “Blue Collar” employees, they can offer following types of compensations:

Piece Rate: Compensating employees for each unit of output. Each employee’s earnings depend on a measure of productivity.

Production Bonus: Incentives paid to an employee for exceeding a specified level of output.

Other compensations or rewards could be:

Praise Promotion Recognition Office size/location Positive Feedback Furniture and fixtures Greetings Company/Social gathering Complements Company crests, pins, ties etc Nonverbal signs


Of course an active HR department will do this. They will analyse the current organizational situation, determine the employee types and their deserved compensation package, etc. But they will not only prepare the plans based on the information and analysis, they have to also implement it practically.Where it would be implemented?

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Venture (B)

Group KAll the plans will be implemented in the GFS-China office, in Good Fortune. As they don’t have any proper compensation system and don’t have any plans how to increase the salary or reward the employees, it should be implemented there.


As soon as possible it has to be implemented because the employees are already corrupted because they are not having any proper compensation plan. Before the situation goes beyond control and the joint venture results in a failure, they have to implement it immediately.

Problem 04____________________________________

GFS china didn’t provide any training to their employees.

Recommendation 04

GFS-China should offer sufficient training and development program for its employees so that their work will be more perfect, ethical and beneficial for the company.


There are many training method to train the employees. Here we’re discussing some of them which could be useful for GFS-China:

On the job training: It’s something that having a person learns a job by actually performing it, under supervision.

Job instruction: The process of listing each job’s basic tasks, along with key points, to provide step-by-step training for employees.

Mentoring: This method is about linking an experienced employee with less experienced employee to share experience, knowledge and skills. Helping someone to change his attitude, not his skills.

Values training: this training is most important for this organization. Through this, the employees would learn about the inner values of the organization and they will also know the processes of how to deal with it.

Diversity training: As GFS-China is a joint venture of China and USA, it’s important for them to provide the diversity training to work in an environment containing different nationalities and culture.

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Venture (B)

Group K


The HR department of GFS-China will implement it under a careful monitoring and supervision process.


It’ll be implemented in the China office of the joint venture of GFS-China because the organization lacks the training of the employees.



Problem 05____________________________________

GFS-China does not have any performance appraisal system to monitor or evaluate the employees.

Recommendation 05

GFS-China should have a proper performance appraisal system so that it can evaluate the performance of the employees from the top level to the blue collars just to ensure the quality of their work and to ensure the accountancy to the organization.


As GFS-China didn’t have any performance appraisal system to measure the performance of the employees, it’s really important for them to have a performance appraisal system.

There are many methods to do the performance appraisal. For GFS-China, we are suggesting few of them:

Graphic Rating Scale: It’s a system of listing a number of traits with a performance range for each. List of traits could be quality, reliability, etc.

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Venture (B)

Group K

Alternation Ranking: It ranks employees from best to worst on a particular trait. Employee who is the highest on the characteristic being measured and the one who is the lowest. It can be used department wise.

Paired Comparison: Ranks employees by listing all possible pairs of employees for each trait and indicating which is the better of each pair.

Essay Description: It’s a written statement describing by manager that described employee’s strengths, weaknesses, past performance and future development.

Anyone in the organization could be the appraisals. They could be:

Immediate supervisor

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Venture (B)

Group K Peer reviews Rating committees Self rating Subordinates, etc.


The HR department will implement it. It will first decide which method is more appropriate for whom and then they will apply it to measure their performance.


It’ll be implemented in the GFS-China as there is no performance appraisal system in there to measure the performance of the employees.


It’ll be implemented after establishing the HR department, As we’ve already suggested to establish the HR department as soon as possible, it’ll have the same priority to implement.

Problem 06_______________________________________

GFS-China needs a well organized Finance Department.

Recommendation 06

GFS-China should have an effective and strong finance department.


We have suggested them to open a HR department where they have to create a Recruitment and Selection committee to recruit the right talents for producing their high quality productions without any compromise. The committee must have a panel of experienced and loyal employees who can assure that the organization is having the very best talent of the market who will further improve the productivity and can adopt the new technology. They can follow the following steps like:

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Venture (B)

Group K

At first they have to determine how many employees they will have in the finance department, and how many ranks would be there. The they will attract a pool of candidates larger than the positions having a finance department related educational background. After the competition of application forms, the applicants will be screen out based on some tests; final interview will be the next step. And then by passing all the steps, candidates will be the final employees of finance department.

Who would l implement it?

The HR department of GFS-China will implement it under a careful monitoring and supervision process.


It’ll be implemented in the China office of the joint venture of GFS-China because the organization lacks an active finance department.



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Venture (B)

Group K

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Documents

Hrm380 Case Gfs China