毕业设计(论文)-The-IHRM-analysis-of-Shandong-Ruyi-Group-to-acquire-Renown-Incorporated.docx

20180822Executive SummaryThis essay concentrated on the international human resource management (IHRM) practices in the case of Shandong Ruyi Group to acquire Renown Incorporated. The acquisition was divided into four phases and in each phase the specific IHRM-related activities were analyzed critically. Then some suggestions about IHRM were made for the two companies to manage the acquisition process more effective, and that other multinational enterprises (MNEs) may absorb the experience to make their cross-border mergers and acquisitions (M&As) successfully.Content1. Introduction32. Acquisition Background and Process33. Pre-M&A Phase43.1 Building up an Integration Team43.2 Assessing HR53.3 Planning for due diligence54. Due Diligence Phase64.1 The Quality of Core HR64.2 HR Cost64.3 Management Mode74.4 Corporate culture75. Integration Planning Phase75.1 The Integration of Organization Structure75.2 The Integration of Recruitment Procedure95.3 The Integration of Compensation System95.4 The Integration of Corporate Culture96. Implementation and Assessment Phase106.1 Deciding Appropriate Expatriates106.2 Establishing Effective Communication Mechanism106.3 Retaining core employees106.4 Training and Developing HR117. Conclusion11Reference121. IntroductionCross-border M&As are the important issues for many enterprises to broaden their business over the world. However, many M&As were failed because of poor performance in IHRM. So there is of great necessary for those companies to place much emphasis upon the IHRM issues in M&As.2. Acquisition Background and ProcessRenown is a well-known Japanese clothing brand which has a history of more than 100 years. But in the past 10 years, its operating condition became deteriorative due to the economic downturn of Japan. Under huge loss in finance, in May, 2010, Renown signed up an acquisition agreement with Shandong Ruyi Group, the biggest textile enterprise in China, and transferred 41% equity to Ruyi (Nakajima, 2010).The process of the acquisition was divided into four phases, including pre-M&A phase, due diligence phase, integration planning phase and implementation phase (Dowling, Festing, & Engle, 2013, p. 87). Pre-M&A phase is a series of assessment and preparation of the acquisition. The acquirer should build up an integration team to undertake the acquisition project. This phase began at the end of 2009, when Ruyi initially considered acquiring Renown. In this stage, Ruyi built up an integration team, analyzed its business strategy and its objectives of the acquisition, and made some preparation for the next phase.The second phase is due diligence phase. This phase is to make a deep survey about the acquired company, in order to assess the potential benefits of the acquisition. For HRM, this assessment would provide HRM-related information to making the acquisition decisions and find out the issues that may affect the acquisition cost.The third phase is integration planning phase. The integration plan is to plan when and how to make the acquisition in detail. The acquirer should consider the investigation result in the due diligence phase, and then makes a detailed and practical plan to integrate the HR of the acquired party, based on its development strategies. (Wei, 2014, p. 20). Before signing up the acquisition agreement, Ruyi made a detailed integration plan to ensure the acquisition implement successfully.The final phase is implement phase, in which the integration plan would be implemented in practice. In this phase, many issues may come out about HRM, such as cultural difference, difficult communication and loss in core employees. The acquirer should take some measures to avoid these issues. The two companies began the acquisition in May, 2010, when Renown signed up the acquisition agreement with Ruyi. The acquisition was completed in January, 2011, when Renown rebuilt its board of directors and integrated its company (Chinese boss is coming, 2011).3. Pre-M&A Phase3.1 Building up an Integration TeamBuilding up an integration team is an effective way to lead the acquisition project and make integration plan (Liu, 2005, p. 20). At the beginning of the acquisition, Ruyi had cooperated with a management consulting company, Hejun, to build up an integration team. The team members not only come from Hejun, but also come from Ruyi and Renown. The managers from Ruyi and Renown provided company information and their development strategies to Hejun, and Hejun helped them to make the integration plan. This team helped the two companies to communicate with each other and led the acquisition project to proceed successfully.3.2 Assessing HR Before researching the acquired enterprise, the acquirer should at first make a comprehensive analysis about the HR of itself (Dowling et al., 2013, p. 88). The advantages can be used for the HRM of the acquired enterprise and the weaknesses can be avoided.Ruyis advantages of HR are obvious. On the one hand, as the largest textile group in China, Ruyi has exquisite textile technology and a large number of experienced workers, which can provide quality and cheap materials for high-end clothing brands. Contributed to its hard-working employees, Ruyis sale revenue raised from 170 million in 2001 to 10700 million in 2010 (Company development, 2016). Ruyi hopes that these professional and energetic employees would bring Renown confidence and passion to develop.On the other hand, Ruyis weakness is lacking of the HR in product design and marketing. Ruyi used to concentrate on the manufacture of raw material but ignored building up its own clothing brand. So Ruyi should make good use of Renowns HR in product design and marketing and promote its industrial transformation and upgrading.3.3 Planning for due diligenceBefore the second phase, some preparations should be made for the due diligence. Since the investigation involves a lot of details of the acquired enterprise, the acquirer should send people to the company for on-site investigation. In February, 2010, Ruyi selected 40 executives to Japan to make the investigation (Chinese boss is coming, 2011). The executives had got some training and have an understanding of Japanese culture before the journey. And Ruyi informed Renown for the investigation, so they have prepared for the investigation.4. Due Diligence Phase4.1 The Quality of Core HRAcquiring high-quality HR is one of the major objectives to make the acquisition. The acquirer should make an assessment of the quality of the counterpartys core HR based on its real needs on the development of new business.To upgrade the industry chain, Ruyi want to popularize Renown brand in China, so it required HR in marketing and costume designing. According to the investigation, Renown has abundant HR fit Ruyis needs. In 1990, Renown acquired Aquascutum, a famous England costume brand which has a history more than 160 years. Now Renown owns more than 30 costume brands and has a number of outstanding costume designers. In addition, Renown opened more than 2600 stores all over Japan (Corporate information, 2016). It has rich experience in marketing. Therefore, the HR Renown owns is exactly what Ruyi needs.4.2 HR CostWhen estimating the acquisition cost, HR cost should be placed in an important part. HR cost is affected by the economic environment of the country and the acquired companys salary system. The employees of Japanese companies enjoy better welfare than the employees in China because of the perfect social and medical security system in Japan. The compensation system of most Japanese companies, including Renown, is based on seniority. As long as the employees work in the company, their wages will increase. The advantage of this wage system is that it can keep the employees work for the company, but the disadvantage is that without the incentive mechanism, the employees have no enthusiasm to work. Therefore, Ruyi should consider change the wage system of Renown, in order to reduce the HR cost and promote the development and positivity of the company.4.3 Management ModeAs a traditional Japanese enterprise, Renown has its own distinctive management mode. Renown does not identify specific duty for every employee. They like to solve the question and complete the task together. This kind of management mode may cultivate the employees belongingness and enhance their loyalty to the company. But it is not conducive to realize the employees self-value. So Ruyi should allocate task more specific or carry out performance evaluation mechanism to improve working efficiency and corporate performance.4.4 Corporate cultureA better understanding of the corporate culture of the acquired enterprise can reduce the conflict between different cultures. Japanese culture is much different from Chinese culture and the difference in development condition of the two enterprises also results in different corporate cultures. As the same as most old Japanese enterprises, Renown is conservative and lacks of innovation. In contrast, Ruyi is aspiring and pay attention to innovation. Renown needs Ruyi to bring it energy to develop, but at the meantime Ruyi should consider the acceptability of its culture. The best way is to combie the valuable brand concept of Renown with the creativity of Ruyi.5. Integration Planning Phase5.1 The Integration of Organization StructureBefore the acquisition, Renown adopted to Japanese traditional organization structure that the chief director is responsible for the overall operation of the company and all of the departments are lead directly by the chief director. This structure can improve working efficiency but may result in arbitrariness.Figure 5.1 The organization structure of Renown before acquisitionResource from: Organization structure. (2010).In the integration plan, the chief director is replaced by a CEO and a CFO. The CEO is filled by the original chief director, stabilizing the company. The CFO is filled by expatriate of Ruyi, monitoring the finance condition of Renown. In addition, based on the new business, the departments are divided more specific.Figure 5.2 The organization structure of Renown after acquisitionResource from: Organization structure. (2016).5.2 The Integration of Recruitment Procedure In Japanese culture, teamwork ability is much important than self-ability. So Renown requires comprehensive ability rather than professional ability in recruitment. Hiring an applicant or not is based on a subjective judgment by the manager. This kind of recruitment mode makes it difficult to recruitment a professional in special field.Clothing enterprises need great designers to catch the fashion and marketing personnels to estimate the change in market. So Renowns recruitment procedure should be integrated. Firstly, the managers should bring up their requirement of HR to the HR department. Then the HR department should set up recruitment positions and detailed job description to the applicants.5.3 The Integration of Compensation SystemAs mentioned above, the seniority-based compensation system of Renown has no help for its development, especially for clothing enterprises which need continuous innovation. Ruyi should consider apply international compensation on Renown, which includes base salary, allowances and benefits. In addition, performance-related pay should also be included. Performance evaluation mechanism can make incentives to the employees and improve the integral performance of the company.5.4 The Integration of Corporate Culture Renown concentrates on cultivating the employees teamwork awareness and loyalty to the company, making the company just the same as their family. This kind of corporate culture makes the employees and the managers closer and promotes their communication. Ruyi should absolute this culture, enhance its cohesion. For Renown, it should learn from Ruyis aggressive and ambitious spirit.6. Implementation and Assessment Phase6.1 Deciding Appropriate ExpatriatesExpatriates play an important role in acquisition that they represent the resource transfer between the acquiring and acquired company (Dowling et al., 2013, p. 89). As for Renown, it sent six top managers to direct Ruyi popularize its brand in China. These managers were selected because they have rich experience in marketing and strong adaptability. One of the managers has experience working in China. So Renown has selected right people to do the right things and it benefited the two companies.6.2 Establishing Effective Communication MechanismAfter the acquisition, Renown had sent managers to hold posts in Ruyi. However, Ruyi failed to communicate well with these Japanese. For example, when the first store of Renown in China was about to open, the Japanese managers had gave some detailed requirement on the decoration. But when they came to visit the store, the decoration was not as they expected at all. Something went wrong on the communication between them and the managers of Ruyi. Therefore, Ruyi should establish an effective communication mechanism to have a better communication with the Japanese managers. To be more specific, Ruyi should make special person to be responsible for information transition between the company and the Japanese managers.6.3 Retaining core employeesIn many acquisition cases, the loss of core employees is the main cause of failure of the acquisition. With a history of more than 100 years, Renown now is acquired by a Chinese company which has only ten-year-history. Many employees of Renown may not accept the acquisition and resign. To solve this question, Ruyi should respect Renowns culture and its brand concept, retaining the employees by its good reputation. As for core employees, Ruyi should give important mission to them and praise their performance, in order to improve their reliance on the company.6.4 Training and Developing HRNew businesses come out after the acquisition, meanwhile new HR is required. Ruyi should train the marketing personnel sent by Renown, making them adapt to the corporate environment and management mode, and introducing the market environment of China. Ruyi should also train the original employees on marketing. For example, Renown sent a marketing manager to Ruyi (Chinese boss is coming, 2011). The manager taught them Japanese traditional way to treat customers. Through the training, Renown also transferred its corporate culture to Ruyi, promoting the communication between them.7. ConclusionIn this essay, some practical suggestions were made based on the analysis of HR-related issues in the four phases of acquisition. Not only Ruyi and Renown, but also other MNEs should consider the suggestions in this essay, paying attention to