COURSE WORK

M016 GLOBAL INTERNATIONAL HUMAN RESOURCE

STUDENT: TRANG PHAN QUYNH NGUYEN

ID: 5298059

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TABLE OF CONTENTS

1. EXECUTIVE SUMMARY.........................................................................................................3

2. INTRODUCTION.......................................................................................................................4

3. COMPANY PROFILE................................................................................................................4

3.1 Virgin Group – Virgin Media...............................................................................................4

3.2 FPT Telecom.........................................................................................................................5

4. KEY ECONOMIC FACTORS IN INTERNATIONAL BUSINESS.......................................5

4.1 Vietnam Country Profile.......................................................................................................5

4.2 PESTEL Analysis.................................................................................................................5

5. HUMAN RESOURCE MANAGEMENT STRATEGY...........................................................8

5.1 Recruitment and Selection....................................................................................................9

a. Recruitment............................................................................................................................9

b. Selection..............................................................................................................................10

5.2 Training, Development and Talent management...............................................................10

a. Training and Development Process.....................................................................................11

b. Talent management..............................................................................................................11

5.3 Performance Management and Appraisal system..............................................................12

5.4 Reward System Strategy......................................................................................................12

5.5 Employee Engagement.......................................................................................................13

6. HRM ISSUES OF VIRGIN FOR JOINT VENTURE............................................................13

6.1 Organisational Issue and the Role of Expatriates..............................................................13

6.2 Culture Issue – Hofstede framework..................................................................................14

7. CONCLUSION..........................................................................................................................14

8. RECOMMENDATIONS...........................................................................................................14

LIST OF REFERENCES:.................................................................................................................15

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1. EXECUTIVE SUMMARY

This report presents Human Resource Management functions in the Joint Venture of Virgin Media (UK) and FPT Telecom (Vietnam) when Virgin Media decides to expand its business to Vietnam. A PESTEL Analysis provides the information about the key economic drivers in Vietnam which helps Virgin to have a brief snapshot about the situation of Vietnam market at the moment. Also, this report presents the Strategy of Human Resource Management in the Joint Venture, how to recruit, select, training and develop the employees in the Joint Venture in an efficient way, using ASK Model, Roger’s seven point plan, 360 degree feedback and Hofstede framework . Besides, this report also mentions the issues which Virgin Media may have to face when entering to Vietnam market which are the effective working of a diverse team and employee ability of adaptation in the new culture. There are also some recommendations for this situation which are more focusing on the quality of recruitment and selection process and provide more training programmes for employees in the host country so that they can understand the organisational culture and work more efficiently in the future.

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2. INTRODUCTIONNowadays, with the globalisation, there are more and more companies try to expand their business outside of its parent country to find more developing opportunities in the new market. Despite of the tough economic climate in the last five years, the development of technology, social media and entertainment is still increasing steadily in all over the world (Kemp, 2012). On the other hand, Vietnam is a developing country which has been considered as one of the most attractive foreign investment destinations in the world (VOV, 2014) and the technology sector in the country has also developed significantly in the recent years (The World Bank, 2013). Therefore, it can be said that now is the right time for Virgin Group - the leading entertainment and telecommunication company in the United Kingdom to invest in Vietnam. This report focuses on Human Resource Management function for the Joint Venture of Virgin Media and FPT Telecom (The telecommunication company in Vietnam) when Virgin Media starts to enter in Vietnam telecommunication market. It provides the analysis of key economic factors in Vietnam and Human Resource Management Strategies in Recruiting, Selection, Training, Development and Reward to help the Joint Venture operating efficiently in Vietnam market.

3. COMPANY PROFILE 3.1 Virgin Group – Virgin Media

Virgin Group is one of the greatest entertainment and telecommunications companies in the United Kingdom that has been founded by Sir Richard Branson. Starting with the first small mail order record company - Virgin Record Stores opened in 1971, Virgin has developed successfully their business with a wide range of sectors which are travelling, financial services, leisure, and holidays and so on (Virgin, 2014).

Figure 1: Business Sectors of Virgin Group

Nowadays, there are more than 50,000 employees who are working from Virgin from over 50 nations in all over the world. Global branded revenue was £15bn in 2012 (Virgin, 2014).

Virgin media is one of the largest business companies of Virgin Group. The vision of the company is to make good things happen for people, communities and business with three key strategies:

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- Taking responsibility for the biggest issues and where the company needs to improve.- Inspiring good ideas about what make things better for people’s lives.- Listening and learning from people around.(Virgin Media, 2014)

3.2 FPT TelecomFPT Telecom is a Vietnamese telecommunication company which provides products and services related to internet, mobile phone and technology. (FPT Telecom, 20014)

4. KEY ECONOMIC FACTORS IN INTERNATIONAL BUSINESS4.1 Vietnam Country Profile

After the wars against colonial power France and the United States in 1975, nowadays, Vietnam is a one-party Communist state which is considered as one of south-east Asia's most dynamic economies and has targeted to become a developed country by 2020 (BBC, 2013). In addition, according to BBC, although there are millions of Vietnamese people who are still relying on agriculture, Vietnam is also developing rapidly in manufacturing, information technology and oil production.

After 12 years of negotiation, Vietnam has joined the World Trade Organisation since 2007. Foreign investment in Vietnam has been growing steadily with the US being one of the main trading partners (BBC, 2013). Also, Vietnam is considered as an attractive investment destination which attracted approximately $22billion in foreign investment in 2013 (VOV, 2014); for example, Samsung shifted its plant from China to Vietnam, has won the license to invest $1.2bn; LG Electronics also said that the company will spend more than $1.5 billion in the next period of 10 years to expand its production of household appliances and electronics products in Vietnam (Vu, 2013) .

4.2 PESTEL AnalysisA PESTEL Analysis of the telecommunication and technology sector in Vietnam will present the external environmental factors which may influence Virgin’s operations when the company enter to Vietnam market. a. Political

Vietnam is a socialist country which operates under the leadership of the Communist Party (PwC, 2008). Political stability is an advantage and one of the essential factors that have helped Vietnam to achieve its economic development policy (Delalande, 2010). However, in the recent years, due to the impressive growing economy, the wealth gap is increasing that may affect negatively to the stability of Vietnam’s Politics (Vaughan, 2014). Taxation policy in Vietnam is quite stable. The standard rate of corporate income tax for foreign investors is 25% (Allens, 2012)

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b. EconomicDespite of this current tough economic globally, Vietnam still achieved a positive economic number with 5.42 per cent increasing of GDP in 2014 (Barbour-Lacey, 2013). In addition, Vietnam has recently announced that Vietnam will allow foreign investors to hold a larger amount in domestic financial institutions as a solution for speeding up the restructuring of the bank system and the improvement of the bad debt (Barbour-Lacey, 2013). According to The World Bank (2013), Vietnam has gained some economic achievements which are:

- A stable macroeconomic situations with the moderate inflation of 6.7% in June 2013 and the significant increase of foreign reserves from 2.2 months to 2.8 months in 2012 and 2013 respectively.

- Strong external balances: Foreign invested sector accounted for 66% of Vietnam total exports and increased by 25% from 2012 to 2013. Cellphones, computer and electronic appliances accounted for more than 50% of total export.

-Figure 2: Vietnam has rapidly cut its trade deficit and now run a surplus (Zhang, 2014)

In addition, international investors are attracted to Vietnam’s low-cost labour pool and large domestic market (Wang, 2014). Therefore, this time could be the right time for Virgin to expand its business to Vietnam due to many benefits which the country can bring to the company.

c. SocialVietnam’s current population is around 92 million people and Vietnam has been the 13th most populous country in the world (World Population Review, 2014). People who are from 15-24 years old account for 18.4% and those who

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are from 25-54 years old account for 44.4%. That means more than 50% Vietnamese people are in working ages (Index Mundi, 2013).

Figure 3: Vietnam Population Chart (World Population Review, 2014) d. Technological

For recent decade, Vietnam’s technology has been developing rapidly. Nowadays, Vietnam has been ranked in top 20 countries of internet uses (Vietnam News 2012). Also, there have been more than 21% of mobilephone users using smartphones and it has been estimated that the number of smartphone users would increase by 5% in the period of 2012-2016 (Vietnam News, 2012).

Moreover, the number of people using social network has also been increasing rapidly. There was only 2.9 million Facebook users in 2011 and it grew to more than 8.5 users in 2012 (Kemp, 2012).

Figure 4: Social Network Users in Asia (Kemp, 2012)

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e. Environmental In the recent years, Vietnam has witnessed a dramatic economic development associated with industrialization, urbanization which has created an increase in exploitation of natural resources, chemical contamination and significant pressures for the environment. Viet Nam is considered as one of the countries which have been affected significantly by climate change which causes natural disasters, floods and droughts and so on, makes a huge loss of human and material resources (The World Bank, 2011)..

f. Legal In order to attract and facilitate foreign investors and to support the progress of modernisation and industrialisation as well as the development of the economy, Vietnam Government has provided a Law in Foreign Invest in Vietnam which gives provisions and instruction for foreign investors in Vietnam (Vietnam National Assembly, 2000);However, there are some limitations for some conditional business sectors, in which, there are telecommunication, broadcasting and television that are the sectors which Virgin aims to invest in Vietnam. Therefore, before entering to Vietnam Market, the company has to ask for permission and approval from the Prime Minister (Allens, 2012). Based on the PESTEL Analysis above, Virgin Media has lots of advantages if the company enters into Vietnam market at the moment. Although there are some difficulties with legal problem, Virgin still has good opportunity to enter in Vietnam due to the needs of foreign investment of Vietnam market at the moment. Based on the research, pursuing a joint venture in Vietnam market would be a right decision for Virgin media to expand its business globally.

5. HUMAN RESOURCE MANAGEMENT STRATEGY

5.1 Recruitment and Selection a. Recruitment

Recruitment is the process of carrying out both practices and activities of the organisation with the aim of attract and identify the potential employees (Torrington et al, 2011). While recruiting people for the international company, it is very important to the HR managers to define and recognise the globally competitive abilities of the applicants. Therefore, the global HR managers in Virgin Media need to know and understand four specific approaches which can apply for recruiting employees for an international joint venture. The four approaches are ethnocentric, polycentric, regiocentric and geocentric (CULC, 2014).

- Ethnocentric Approach: All the employees would be recruited from the UK and appointed to work in Vietnam by Virgin Media UK.

- Polycentric Approach: the employees would be recruited from Vietnam to work in Vietnam according to the vision and strategies of Virgin Media.

- Regiocentric Approach: The managers for the joint venture would be chosen from many other countries.

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- Geocentric Approach: Employees will be both international and local.

Based on the situation and target of Virgin to expand the company by collaborating with FPT Telecom, polycentric can be seen as the most appropriate approach for Virgin Media to recruit new local employees who can understand clearly Vietnam market and help Virgin Media to limit culture shocks and deal with culture differences and problems in the new market. According to the business of providing the products and services related to mobile, phone, television and so on, there are the key positions and roles which need to be considered for the recruitment process, that are:

- IT Engineers- Marketers- Accountants- Customer services- Sales assistants- Cashiers - Financial Department- HR Manager

The information about the recruitment for the joint venture of Virgin Media and FPT Telecom would be published via social media, FPT official website, corporate website and advertisements.

Also, there are various methods of recruitments which Virgin Media and FPT Telecom can apply for their joint venture such as: corporate website, recruitment agencies, Job Centre plus, Apprenticeships and so on. In addition, Virgin Media should continue its apprenticeship program in Vietnam market due to the experience from the success of the apprenticeship program in Vietnam.

The recruitment could also be internal recruitment from FPT Telecoms.

b. SelectionSelection is the process of the combination of all necessary information about the applicants to make decisions for the recruitment. This process is one of the most important processes which may decide the success of the joint venture due to the human resources.

The selection process will be followed by the following steps: - Applications: candidates provide a completed application forms including CV,

cover letter expressing the positions which they are interested in. - Initial review: The applications will be reviewed by HR Managers - Tests: to know the knowledge and abilities of the candidates

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- Face to face interview: After the candidates are selected from the three rounds above, the candidates will have an online interview with the human resources managers or the professionals working in the sectors of recruitments.

- Assessment: the HR managers and other professional will base on the result from recruitment process and selection process to choose the best and most appropriate candidates for each positions of the joint venture.

To be more exact and efficient, the selection process may refer to the use of “Roger’s seven point plan” (1952) as follow:

According to the “Roger’s plan”, there are lots of attitudes and characteristics to consider to make decisions whether the joint venture think that persons or not. The plan presented a very clear picture about the intended recruits for selection process.

5.2 Training, Development and Talent managementa. Training and Development Process

Training and Development are the processes which always have the positive impact on the performance of employees, both individuals and team working. By doing training and development programmes, human resource managers can get to know their employees, encourage and empower them to work efficiently following the requirements and organisational culture of Virgin and FPT Telecom.

The training model - ASK can be used to provide a clear purpose of the training process:

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(CULC, 2014)

Because Vietnam is still a developing country, the Vietnamese workforce also does not have lots of experience and skills to deal with the international business problems. In addition, the working attitude is not really professional. Therefore, the training programs which provide the employees the necessary skills and knowledge will be very useful for the employees to develop themselves and be more effective when working for the joint venture. There are some methods can be applied for the training programmes which the joint venture provides for the new employees such as making behaviour modelling to help the employees recognise the culture and working attitude of people in the organisations. It also could be discussion and presentation about the culture cross or expatriate which can help the employees to gain more knowledge and skills about the differences between Vietnam and UK; then they can change themselves to be more fit with the operations and culture of Virgin Media. On the job training is also a very efficient way to help the employees become more confident thanks to the detailed directions from their current colleagues.After training process, the company will provides the opportunities for the employees to apply what they have learnt in the training program.

b. Talent management The recent times, talent management (TM) has rapidly become a key strategic management activity for organisations (CULC, 2014). Based on the training and development process, HR managers will need to make an analysis to identify and develop a talent group of high potential and high performing employees. Moreover, HR managers also need to find what position is matched with each employee to improve the operation of the joint venture.

5.3 Performance Management and Appraisal system Performance appraisal system provided a formalised process to review the performance of employees. HR function will design and provide the criteria which will be used to examine and assess the performance of the employees. According to that, line manager has to appraise the work of their subordinates.

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It can be seen that the process of performance appraisal is a cycle moving continuously to improve the operations of the joint venture.

In addition, 360 degree feedback can be used to appraise the performance of the employees (Torrington et al, 2011). HR function will design a questionnaire for the employees to get feedbacks from each other and make plan to implement, to develop themselves.

After that, all employees are expected to make a portfolio of evidence of their performance over the period, how they have developed themselves based on the feedbacks they have got.

5.4 Reward System StrategyReward System is the strategy used to motivate and encourage employees for maximising potentials. Reward management plays a vital role to maintain the stability of the organisations to achieve and share common goals.

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(CULC, 2014)

Forms of reward are not only monetary but also the promotion and development. In reference to Torrington (2011), there are four strategies to pay which are payment by result, Performance related pay, Skill-based pay and Profit sharing.

In the case of the joint venture of Virgin Media and FPT Telecom, performance related pay is the most appropriate method of payment at the moment, because the joint venture has just entered Vietnam market and it is quite difficult for them to gain the expected profit. There will be some risks; therefore, performance related pay may help to keep the employees working for a long time in the future. Another method of reward is promotion and development. That means the employees working in this joint venture will have opportunity to be promoted if they have a good performance in the working period.

5.5 Employee Engagement Employee engagement has both attitudinal and behavioural components which brings the argument that the involvement of employees creates workers who are interested in their roles and responsibilities and can perform at a higher level (Torrington, 2011). There are some recommendations for Joint Venture between Virgin Media and FPT Telecoms to achieve the engagement of its employees. Firstly, the company should let the employees know that they believe that their employees’ contribution would make the company develop in the future. Secondly, the company could create some programmes which encourage the employees give their opinions and ideas of how they think to improve the work of the company.

6. HRM ISSUES OF VIRGIN FOR JOINT VENTURE6.1 Organisational Issue and the Role of Expatriates

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With the focus on polycentric approach, most of employees working in the Joint Venture are Vietnamese. This may cause the misunderstanding of the original vision and strategies of Virgin when the company enters into Vietnam market. Also, Vietnamese local people working together may create a working environment which is totally different with the organisational culture of Virgin and that may lead to the conflict with the expatriates who are working in the host country – Vietnam. In this situation, the role of expatriates is to direct and manage the Joint Venture operating according to the visions and strategy of the company, as well as adjust some activities to be more appropriate with the attitudes and characteristics of local people in the host country.

6.2 Culture Issue – Hofstede framework

According to Hofstede framework, it can be seen that there are large gaps of power distance, individualism and indulgence between the United Kingdom and Vietnam. In Vietnam, the high power distance means that Vietnamese people are influenced by the positions people held while in the UK, there is a belief that everyone should be treated equally. Vietnamese people prefer to have high positions in the organisations. Besides, Vietnam’s individualism is much lower than Britain’s. This means that Vietnamese people focus on group working and the common goal while British people are likely to express themselves. It may cause some problems when the expatriates from Virgin Media have to work together with Vietnamese people.

7. CONCLUSIONIn conclusion, this time is the right time to Virgin Media to expand their business to Vietnam according to the PESTEL Analysis above. With the clear and strategic human resource management strategy, the Joint Venture can absolutely attract, recruit and encourage the employees to work and contribute for the company. However, there are still some issues related to the differences in culture which the two companies have to face which are team working contribution, the adaptation of the expatriates to the working culture in Vietnam and the fair problems among the local employees in the Joint Venture.

8. RECOMMENDATIONS

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There are some recommendations can be made for the Joint Venture of Virgin Media and FPT Telecom. Firstly, the HR managers of Virgin Media should create more programmes which introduce and deliver the value of organisational culture of Virgin to Vietnamese local employees so the Vietnamese employees can understand the importance of organisational culture and adjust themselves to be more appropriate and efficient in the future. Also, during the recruitment and selection process, HR managers should concentrate on recruiting and selecting the people who have an adaptable ability so that they can easily get to know the new organisational culture in a global joint venture.

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