In this individual assignment, you are required to answer any two of the three questions from the Case for critical analysis: SHUI FABRICS
Ray Betzell, general manager for the past five years of a joint venture between Rocky River Industries and Shanghai Fabric Ltd., was feeling caught in the middle these days. As he looked out over Shanghai’s modern gleaming skyline from his corner office, Ray knew his Chinese deputy general manager, Chiu Wai, couldn’t be more pleased with the way things were going. Ten years ago, Rocky River had launched Shui Fabrics, a 50-50 joint venture between the domestic textile manufacturer and the Chinese company, to produce, dye and coat fabric for sale to both Chinese and international sportswear manufacturers. After many obstacles, considerable red tape and several money-losing years, the joint venture was fulfilling Chiu Wai’s expectations – and those of the local government and party officials who were keeping careful tabs on the enterprise – much more quickly than he’d anticipated. By providing jobs to close to 3000 people, Shui was making a real contribution to the local economy. Job creation was no small accomplishment in a country where outside experts estimated that the actual (as opposed to the official) unemployment rate routinely hovered at 20 per cent.
From Chiu Wai’s point of view, Shui was generating just the right level of profit – not too little and, just as importantly, not too much. With so many Western–Chinese joint ventures still operating in the red, Chiu Wai saw no reason Ray’s Western bosses shouldn’t be more than satisfied with their 5 per cent annual return on investment. Those earnings weren’t going to land him in hot water with local authorities, many of whom still viewed profits made by Western companies on Chinese soil as just one more instance of exploitation in a long history of foreign attempts at domination.
If Chiu Wai had been eavesdropping on the conversation Ray had just had with Rocky River president Paul Danvers, the Chinese manager would have certainly been dismayed. Ray, who’d thoroughly enjoyed his time in China, was painfully aware of the quiet frustration in his boss’s voice as it travelled over the phone lines from the other side of the world. To be sure, Paul conceded, Shui had cut Rocky River’s labour costs, given the company access to the potentially huge Chinese market, and helped inoculate the firm against the uncertainty surrounding the periodic, often contentious Western–Chinese textile trade negotiations. Current import tariffs and quotas could change at any time.
‘But a 5 per cent ROI is just pathetic,’ Paul complained. ‘And we’ve been stuck there for three years now. At this point, I’d expected to be looking at something more in the order of 20 per cent.’ He pointed out that greater efficiency plus incorporating more sophisticated technology would allow Shui to reduce its workforce substantially and put it onthe road to a more acceptable ROI. ‘I’m well aware of the fact that the Chinese work for a fraction of what we’d have to pay American workers, and I do appreciate the pressure the government is putting on you guys. But still, it doesn’t make any sense for us to hire more workers than we would in a comparable domestic plant.’
After an uncomfortable silence, during which Ray tried and failed to picture broaching the subject of possible layoffs to his Chinese counterparts, he heard Paul ask the question he’d been dreading: ‘I’m beginning to think it’s time to pull the plug on Shui. Is there any way you can see to turn this around, Ray, or should we start thinking about other options? Staying in China is a given, but there has to be a better way to do it.’
1 How would you characterise the main economic, legal–political and sociocultural differences influencing the relationship between the partners in Shui Fabrics? What GLOBE Project dimensions would help you understand the differences in Chinese and Western perspectives illustrated in the case?
2 How would you define Shui’s core problem? Are sociocultural differences the main underlying cause of this problem? Why or why not? How would you handle the conflict with your boss back in, New Zealand, Australia or the United States?
3 If you were Ray Betzell, what other options to the 50–50 joint venture would you consider for manufacturing textiles in China? Make the argument that one of these options is more likely to meet Rocky River’s expectations than the partnership already in place.
In this individual assignment, you are required to answer any two of the three questions from the Case for critical analysis: Burgerfuel
Source: Portfolio item from Samson et al. (2016). Management in New Zealand 2nd edition (Page 549)
BurgerFuel, headquartered in Auckland, opened its first premise on Ponsonby Road in 1995, with the second store opening in Takapuna in 1997. Australian stores started to appear in 2006, and Middle Eastern stores started opening in 2009. The company quickly gained a solid reputation for fresh, flavoursome burgers and has expanded from a single store to BurgerFuel Worldwide (BFW), operating in New Zealand, Australia and the Middle East in around fifteen years.
BurgerFuel offers halal-certified food and this is a point of distinction in the burger market, along with the distinctively Kiwi take on the menu. Halal is the slaughtering and processing of animals according to Islamic law; to gain certification involves paperwork and correctly following processes that draw on understanding cultural values, practices and expectations.
BurgerFuel has a Board to provide corporate governance. In 2013 this Board comprised six talented men: Peter Brook, Josef Roberts, Chris Mason, Alan Dunn, Tyrone Foley and Andrew Kingstone. Each Board member has extensive business experience. For example, Chris Mason is the founder of BurgerFuel and is the CEO of International markets. Peter Brook is the Chairman of the Board and was formerly the Managing Director of Merrill Lynch (NZ) Limited. He is involved with a number of directorships. Josef Roberts is the group CEO. He was the former CEO and founder of Red Bull Australasia. Independent director Alan Dunn has significant experience in fast food and was at one stage a CEO and Chairman (1993–2003) for McDonald’s New Zealand. Tyrone Foley is the group Chief Operating Officer (COO); Mark Piet is the Chief Financial Officer (CFO). The Board is responsible for the overall direction of BFW Limited’s business and affairs on behalf of its shareholders. The 2014 Annual Report figures suggest that the Board and organisation as a whole are doing well, with the business posting positive growth both nationally and internationally.
1 What impact, positive or negative, does an all-male Board bring to the organisation?
2 How might BurgerFuel embrace even more cultural diversity within its organisation?
3 What policies would you expect BurgerFuel to put in place to get the most from and for an increasingly diverse workforce?Order Now