BUMGT6958 Comparative Issues in International Management Report 2 Sample

BUMGT6958 Comparative Issues in International Management Report 2

Assignment Details

In your report, you should refer to at least 5 academic (peer-reviewed) journal articles. Recent academic journal articles (with a publication date of 2020+) should be used. Your report must meet the threshold of 5 recent academic journal articles.

Use a report format (executive summary, introduction body text-sub-headings can be used, recommendations, conclusion, reference list). Support for Business Research Report preparation and writing is available at https://federation.edu.au/current-students/learning-and-study/online-and-after-hours- support/after-hours-tutoring Please also consult any relevant information on the subject’s Moodle site. Use the APA reference system - that is, use author’s last name and date for in- text citations (and include the page number if you use a direct quote), and make sure your reference list is formatted in alphabetical order of authors’ last names.

Choose one of the following two topics:

Topic 1:

An Australian accommodation service provider company which is about to expand its operation to Middle East has appointed you as a consultant. You have been asked to write a report advising the company about whether it should send a management team from Australia or appoint locally to oversee the setting up and management of its operation. Your report should explain and justify your recommendations, referring to relevant international management concepts and theories.

OR

Topic 2:

You are responsible for overall management including HR and operations of a soft drink producing company of Australia. Your company is interested to commence business operation in European market and wants to send you form Australia to establish the business. You are asked to write a report about the support mechanisms that the company should put in place to support you. Your report should explain and justify your recommendations, using relevant international management concepts and theories, for the support mechanisms for you as an Australian expatriate manager.

Solution

Introduction

Mantra Group; Australia's largest accommodation provider, who operate the Mantra Hotels, Peppers Resorts, and BreakFree brands (Mantrahotels.com, 2024). They deal with hotels, resorts and apartments, as a matter of providing services in the service of both luxury and cheap markets. For example, the company is present in Australia, New Zealand and Indonesia with vast experience and dedicated service standards. To further its growth strategy, Mantra Group is checking out of the Middle East, a fast emerging region with prime requirement for accommodation services. Compared to other regions, the Middle East is a suitable host for substantial opportunities of growth in hospitality sector. The region is rich with key markets with many such as the United Arab Emirates (UAE) and Saudi Arabia investing heavily depending on tourism and infrastructure making it an attractive playing field for international hospitality providers. The region is appealing factors like growth of population, economic diversification and government led initiatives to increase tourism. To take one example, Saudi Vision 2030 is meant to lessen Saudi Arabia's reliance on oil and boost investments in, for example, tourism and hospitality.

We make strategic recommendations regarding whether Mantra Group should appoint local managers or send a management team from Australia to the Middle East. The report will explore the cultural, legal and market barriers and opportunities of expanding into this region by assessing both options. The report will recommend on which staffing strategy should be adopted to successfully setup and run the operations based on these factors.

Challenges and Opportunities of Expansion to the Middle East

Cultural and Institutional Challenges

An expansion in operations to the Middle East incurs cultural challenges as the cultural norms differ significantly between Australia and the countries in the Middle East. Hofstede’s Cultural Dimensions Theory is one of the key frameworks to understand these differences. For instance, power distance dimension is much higher in the Middle East when compared to Australia. As a result, the hierarchical structure is more obvious and employees usually anticipate clear directives from their superiors. Such differences in expectations regarding leadership could pose a challenge for Australian managers, for MBA assignment expert who may be accustomed to a more egalitarian management style. Uncertainty avoidance is another critical dimension that is often higher in Middle Eastern cultures, meaning there is a greater emphasis on avoiding ambiguity and adhering to strict rules and protocols (Al Muqarshi, Kaparou & Kelly, 2021). Australian managers, who might be used to more flexible and informal business practices, may struggle with the region’s reliance on formal procedures and documentation.

Legal and Regulatory Challenges

Foreign companies like Mantra Group also face challenges posed by the legal and regulatory landscape of the Middle East. Each country in the region has its own set of laws and regulations governing foreign business operations. In some countries, such as the UAE, foreign companies must have a local partner who owns a significant stake in the business, often up to 51%. This ownership requirement can complicate the expansion process for foreign businesses, as they must navigate partnerships and shared ownership models. The introduction of free zones in countries like the UAE offers some relief, allowing foreign businesses 100% ownership within designated areas. However, these zones usually have restrictions on business equity and location. The Middle East also has complex labor laws that are country specific. Certain countries require regulations regarding employment contracts, employee rights, and the hiring of foreign workers (Bodolica, Spraggon & Badi, 2021). For example, in the hospitality industry, which very often has a high dependence on the work of a large expatriate workforce, this is especially relevant.

Market Opportunities

However, such challenges don’t discourage companies like Mantra Group from opportunities that exist in the Middle East. Ambitious government initiatives to diversify their economies from oil dependence are driving a surge in the region's tourism and hospitality sectors. For example, Saudi Arabia’s Vision 2030 aims to develop the tourism sector and introduce new tourist destinations, such as luxury resorts, theme parks and heritage sites. Mantra Group looks to capitalise on this initiative to boost international tourist arrivals from 81.4 million (2016) to 100 million by 2030. Dubai and Abu Dhabi are already well established tourism hubs themselves, with the UAE already attracting millions of overseas visitors each year. For instance, in 2019, Dubai welcomed some 16 million tourists making it one of the most visited cities in the world (Rouziou et al. 2024). Its strategic location as a global transit hub and business friendly policies also make the UAE an attractive market for expansion. Demand for high quality accommodation is also rising, as the number of international travelers continues to climb, as well as the number of the growing middle class, making a clear market opportunity for Mantra Group’s luxury and mid range accommodation offerings.

Figure 1: Impact of Cultural Barriers
(Source: Rouziou et al. 2024)

Benefits of Sending an Australian Management Team vs. Appointing a Local Team

Benefits of Sending an Australian Management Team

• Knowledge Transfer and Expertise

The Australian management team would combine expertise well placed at the corporate level in relation to Mantra Group’s corporate culture, operational efficiency and brand values. They have enough experience of managing the company's operations in several regions across that they will be able to implement its service standards and process across the Middle East. This methodology is consistent with the application of Knowledge Management Theory whereby transferring explicit knowledge (such as documented procedures, standard operating guidelines and best practices) from the head office to a new market is of value (Barakat & Milton, 2020). This transfer maintains operations consistency and continues to adhere to high Mantra Group standards.

Figure 2: Knowledge Management Theory
(Source: Barakat & Milton, 2020)

• Maintaining Corporate Identity and Consistency

Conservation of the corporate identity of Mantra at the international expansion level is important. If the company sends an Australian management team, it can be sure that its core values, customer service protocols, and image remain in place. Corporate Governance Theory emphasizes on the need to have corporate policies and ethical stand policy embedded at every level of operations so as to sustain the brand consistency. An Australian management team familiar with Mantra’s governance and operational standards would have the experience needed to implement and maintain these protocols in the new market, ensuring brand consistency across international borders.

Figure 3: Corporate Governance Theory
(Source: Krieg, 2023)

• Control and Coordination

An expatriate team provides direct control over the initial setup and ongoing coordination between headquarters and the new regional office. Having a trusted, experienced team in charge reduces the likelihood of misinterpretations or operational misalignments that could occur due to cultural or language barriers. This approach allows for better oversight of the expansion process, ensuring that critical decisions align with the company’s overall strategy (Krieg, 2023). It also facilitates quicker decision-making and implementation, as the team would not need to navigate the learning curve that local hires may face when familiarizing themselves with Mantra Group’s operational model.

• Global Standardization Strategy

Mantra Group could adopt a Global Standardization Strategy in its Middle Eastern expansion, as suggested by artlett and Ghoshal’s Global vs. Multidomestic Strategies. This strategy promotes the standardization of products and services to maintain quality across different markets. By sending an Australian management team, Mantra can ensure that the same high standards in customer service and operational efficiency are implemented in the new region. This standardization helps in some operations but also regarding reinforcing brand identity; people from Middle East will have a similar experience with customers from Australia and other regions.

Challenges of Sending an Australian Management Team

• Cultural Misalignment

Benefits are achieved, but cultural misalignment could be triggered by sending an Australian management team. An expatriate team might not be able to adjust to cultural norm of the Middle East if it is different from that of Australia. For example, the structure of Middle Eastern societies is often hierarchical while the Australians would favour a more egalitarian approach. Trompenaars’ Cultural Dimensions theory highlights that in such situations misunderstandings and inefficiencies can occur if proper management is not exercised. For instance areas including leadership style, negotiation tactics and interpersonal relationships may yield to miscommunication that is likely to have a bearing on business operations (Antwi-Boateng, 2020)..

• Cost Considerations

Relocating an Australian management team can be financially encompassing. Expatriate packages include all costs – higher salaries, housing allowances, health insurance and other benefits –associated with the expatriate packages. Usually these costs are much more than would be paid for hiring locally, thus the sending of expatriate team is much less cost effective.

• Limited Local Networks

One of the key challenges of sending an Australian management team is their potential lack of local networks. Successful business operations in the Middle East often rely heavily on relationships with local stakeholders, including government officials, suppliers, and business partners. Foreign managers unfamiliar with local customs and business etiquette may struggle to build these crucial networks, which could delay the establishment of operations or hinder business growth (Zahoor, Wu, Khan & Khan, 2023). Local expertise in navigating bureaucratic processes, understanding market demands, and fostering partnerships is essential for long-term success in the region.

Benefits of Appointing a Local Management Team

• Cultural Competence

Hiring a local management team offers the advantage of cultural competence, as local managers are already familiar with the business norms, social customs, and regulatory environment in the Middle East. Cultural Intelligence (CQ) Theory underscores the importance of understanding and adapting to local culture for effective management. Local managers are more likely to understand the nuances of conducting business in a high-context culture, where indirect communication, relationship-building, and trust are paramount (Naguib & Aref, 2024). A cultural competence makes handling employees, customers, or business partners easier but also contributes to operational success.

• Regulatory Ease

Middle East has a complex regulatory landscape, local managers are more adept at navigating this. More specifically, they're more comfortable with local laws, such as labor laws, taxation laws and business licensing laws and are capable of handling government relations. However, this local knowledge can dramatically lower the risk of the regulatory non compliance and accelerate the time to geographical opening up new business operations. Additionally, a local team would have a superior understanding of the nationalization requirements that are commonplace in such as Emiratization, Saudization, and the sort.

• Cost-Effectiveness

It can be more cost effective to appoint a local management team than relocate an Australian team. Local salary benchmarks are often lower than the compensation packages required for expatriates, and there are no additional costs for relocation, housing, or travel.

• Local Networks and Relationships

A local management team brings established relationships with key stakeholders, such as government officials, business leaders, and suppliers. These networks are critical for business success in the Middle East, where strong personal connections often play a more significant role than in Western business contexts (Ajú, 2022). Local managers are better positioned to navigate these networks, build trust, and secure the necessary partnerships and approvals for smooth business operations.
Challenges of Appointing a Local Management Team

• Lack of Familiarity with Corporate Culture

A major challenge of appointing a local team is the potential lack of familiarity with Mantra Group’s corporate culture. Local managers may not fully understand the company’s values, service standards, and operational processes, leading to inconsistencies in service delivery. Organizational Culture Theory (Edgar Schein) highlights the importance of aligning new employees with the organizational culture to maintain brand identity and operational efficiency (Fabbri & Al-Qassemi, 2022) . Without proper training, local managers may struggle to integrate Mantra’s corporate ethos into their management style, potentially diluting the brand’s identity in the new market.

Figure 4: Edgar Schein’s Culture Theory
(Source: Fabbri & Al-Qassemi, 2022)

• Potential for Conflicts

Cultural differences between local and expatriate teams can lead to conflicts. For instance, differing leadership styles or expectations regarding decision-making authority could create tensions between the local management and the Australian head office. Cross-Cultural Conflict Management Theories suggest that managing these conflicts requires an understanding of both cultures and effective communication. If not addressed properly, these conflicts could hinder collaboration and affect the overall success of the Middle Eastern operations (Naczyk, 2022).

Figure 5: Cross-Cultural Conflict Management Theory
(Source: (Naczyk, 2022)

• Training and Development Costs

While hiring locally may reduce initial costs, there are still significant expenses associated with training local managers to meet Mantra’s operational standards. Local hires may require extensive training in corporate culture, service standards, and operational protocols, which can be both time-consuming and costly.

Recommendations

Hybrid Approach (Combining Both Australian and Local Teams)

Mantra Group should adopt a transnational strategy that leverages both Australian expatriates and local hires in its Middle Eastern operations. This hybrid approach combines the strengths of both options while mitigating the risks associated with each. Initially, sending a small Australian management team would ensure that corporate culture, brand standards, and operational practices are properly established. These expatriates would be responsible for setting up operations, transferring knowledge, and training local employees in line with Mantra Group’s expectations (Lee & Ho, 2022). Once operations are established, the focus should shift towards appointing local managers for day-to-day operations. Local managers bring cultural competence, regulatory knowledge, and established networks, which are crucial for the long-term success of the business in the Middle East. By doing this, the company takes advantage of local know how down the track but at the same time controls the business and remains consistent in the early days. This recommendation is supported by Ethnocentric vs Polycentric Staffing models which suggest balancing global consistency with local responsiveness in staffing.

Training and Cultural Integration Programs

Cross cultural programs for Australians expatriates and local hires should be delivered in order to ensure a smooth collaboration between Australians expatriates and local hires. With a theory based on Cultural Intelligence Theory these would be programs which would help expatriates and local managers develop the right skills to work effectively across cultural boundaries. Communication styles, leadership expectations and conflict resolution training is also a must for everyone. To avoid the need for foreign investment, leadership development programs should be setup to foster local talent in moving to higher levels of leadership within the organization, to ensure transition towards local leadership in the future.

Conclusion

Summarizing Mantra Group’s venture into the Middle East continues to be challenging and an opportunity. It is advantageous to send an Australian management team which gives the good of knowledge transfer, operational control and brand consistency, or to appoint a local team, which gives cultural competence, cost effectiveness and good local networks. The recommendation is for a hybrid approach with the combination of expatriate expertise and local leadership, as the former is important for quick wins but events happen faster than the latter. According to this strategy, Mantra Group could find the balance retaining those global standards across the board but having local insights, which means a smooth journey into local management and ongoing growth in the Middle East.

References

Ajú, M. M. (2022). Reshaping the African Union Mission in Somalia: From AMISOM to ATMIS. The Horn Bulletin, 5(3). https://www.academia.edu/download/92356169/e_HORN_Bulletin_Vol_V_Iss_III_May_June_2022_4_.pdf

Al Muqarshi, A., Kaparou, M., & Kelly, A. (2021). Managing cultural diversity for collective identity: A case study of an ELT department in Omani higher education. Educational Management Administration & Leadership, 49(6), 976-995. https://journals.sagepub.com/doi/abs/10.1177/1741143220921187 Bodolica, V., Spraggon, M., & Badi,
H. (2021). Extracurricular activities and social entrepreneurial leadership of graduating youth in universities from the Middle East. The International Journal of Management Education, 19(2), 100489. https://www.sciencedirect.com/science/article/pii/S1472811721000380

Antwi-Boateng, O. (2020). The role of norm entrepreneurship in nation-building: Sheikh Zayed of the United Arab Emirates. Asian Journal of Middle Eastern and Islamic Studies, 14(2), 268-287. https://www.tandfonline.com/doi/abs/10.1080/25765949.2020.1760546

Barakat, S., & Milton, S. (2020). Localisation across the humanitarian-development-peace nexus. Journal of Peacebuilding & Development, 15(2), 147-163. https://journals.sagepub.com/doi/abs/10.1177/1542316620922805

Fabbri, R., & Al-Qassemi, S. S. (2022). Urban Modernity in the Contemporary Gulf: Obsolescence and Opportunities (p. 288). Taylor & Francis. https://library.oapen.org/handle/20.500.12657/50899 (Fabbri &

Krieg, A. (2023). A new regional fault line: the Middle East divided in search of a post-revolutionary order. In Handbook of Middle East Politics (pp. 226-239). Edward Elgar Publishing. https://www.elgaronline.com/edcollchap/book/9781802205633/book-part-9781802205633-19.xml

Lee, Y. J., & Ho, J. (2022). Basic education in Singapore. In International Handbook on Education in South East Asia (pp. 1-25). Singapore: Springer Nature Singapore. https://link.springer.com/chapter/10.1007/978-981-16-8136-3_6-2

Mantrahotels.com, 2024. Home. Available at: https://www.mantrahotels.com [ Accessed on: 23.10.24]

Naczyk, M. (2022). Taking back control: Comprador bankers and managerial developmentalism in Poland. Review of international political economy, 29(5), 1650-1674. https://www.tandfonline.com/doi/abs/10.1080/09692290.2021.1924831

Rouziou, M., Bolander, W., Peesker, K., Hautamäki, P., Rangarajan, D., Samaraweera, M., ... & Westphal, J. (2024). Global Events Demand Global Data: COVID-19 Crisis Responses and the Future of Selling and Sales Management around the Globe. Journal of International Marketing, (FORTH), 85-p. https://hal.science/hal-04717619/

Zahoor, N., Wu, J., Khan, H., & Khan, Z. (2023). De-globalization, international trade protectionism, and the reconfigurations of global value chains. Management International Review, 63(5), 823-859. https://link.springer.com/article/10.1007/s11575-023-00522-4 Naguib, R., & Aref, A. (2024). Empowering Women Through Public Sector Employment in Qatar: Challenges and Opportunities. Women’s Empowerment and Public Policy in the Arab Gulf States, 75. https://library.oapen.org/bitstream/handle/20.500.12657/88391/978-981-99-6006-4.p