Global Management Strategy Precision Parts, or PPQ parts, is a vehicle parts manufacturer with goals to expand globally over a four year period. Specific goals the company will address during this time frame include increasing the number of employees from 5,000 to 10,000, building 80% of their facilities outside of the United States, increasing their world market on small SUV parts from 5% to 9%, increasing stock price from $10 to $22, increasing profit margins from 6% to 13%, decreasing annual employee turnover from 28% to 17%, and increasing current charities from 0.5% of profits to 5%. To help PPQ realize these goals several strategies will be used including a talent development strategy, an employee retention strategy, a market strategy, and an employee volunteer program. These new strategies will be used in conjunction with PPQs decision to relocate 80% of its facilities outside of the United States to help increase revenue, employee quality and morale, and demonstrate corporate social responsibility by building on the corporation’s values through community interaction. International Management Location is vitally important to an organizations health especially during uncertain economic periods that may result in lower than average performance in a company’s domestic settings. This is one of the reasons why PPQ will seek to expand the majority of its new operations overseas. Some of the factors that have influenced PPQ’s new global perspective of business include location, cost, innovation, productivity, and proximity to markets, suppliers, and competitors (Heizer & Render, 2012.). PPQ will open three new facilities in southeast China- a fabrication line, an assembly line, and a corporate headquarters. The assembly lines will be located in Guangzhou, China. The new corporate headquarters will be located just next door in Hong Kong. The two new facilities will have product-oriented layouts making sure adequate space is provided for equipment. Guangzhou was chosen because of economic factors that support PPQs global expansion ambitions such as Guangzhou handling 15% of Chinas foreign trade through its major port Huangpu, access to raw materials including steel and other textiles, availability of transportation through the Wuhan and Jiulong railroads and international airport, proximity to educational centers like Sun Zhongshan and Jinan Universities, and proximity to competitors all ensuring a diverse, innovative, and educated workforce (Guangzhou or Canton, 2008). Hong Kong was chosen because of its incorporation benefits which allow ease of offshore company setups by eliminating unnecessary bureaucracy and red tape, allowing foreign ownership of shares in the company, and utilizing their corporate income tax structure where no taxes are paid on estates, capital gains, VAT/GST, or withholdings on dividends or interest and is a flat 16.5% (Entrepreneur’s Guide To Forming An Offshore Company In Hong Kong, 2012). China is a communist state moving from a strongly controlled planned economy to a more fiscally decentralized market economy and is the world’s leading exporter. The Chinese renminbi has a slightly higher value than the US dollar. Some economic factors affecting Chinas development include high domestic saving and low demand, sustaining job growth for its population, reducing corruption, and mitigating environmental damage due to rapid economic growth in the past decade (CIA: The World Fact Book: China, 2012) . Some of PPQs direct competitors in the area include Ford Motor Company which just announced a newly built assembly plant in Hangzhou (Ford China to Build $760 Million Assembly Plant in Hangzhou: Doubles China Passenger Car Capacity to 1.2 Million Units Annually, 2012), and Metaldyne- which has a chassis manufacturing plant in Hangzhou and a plant in Suzhou that produces powertrain components like aluminum die-cast valve bodies, crankshaft dampers, and sintered engine products (Supply LINE, 2005). Talent Management Global companies are continually seeking new ways to attract, retain, and excite global leaders in an effort to help them achieve their global ambitions. Finding the right talent in emerging economies is a challenge because it can be scarce, expensive, and hard to retain. Finding local managers in China, for example, presents a challenge because approximately 2,000,000 potential job candidates out of a population of over 1,300,000,000- or about 15% possess the managerial and English-language skills needed to fill new positions for PPQ’s new expansion. Another challenge is that senior managers in China who work for global organizations switch companies at a rate of 30 to 40% a year which is 5 times the global average (Dewhurst et al., 2012). PPQ will develop an integrated talent development program to help double its employees during the international transition period. This will include focusing on local talent willing to relocate overseas, but also search for talented individuals in China with a desire to work for PPQ. The talent management team will focus on processes and activities throughout the employee life cycle including recruiting and hiring, training, professional development, career development, cross functional assignments, succession planning and exit processes (Downs, 2012). One of the challenges will be recruiting Chinese workers because the state still exerts control and censorship over the internet, media, publishing, and education although it appears to lessen more-and-more every year (China, 2003). Market Management Company’s fit into four different categories regarding market expectations and net growth. These include world champions, sprinters, marathon runners, and out-of-shape runners (Bruckner et al, 1999). World champions meet and exceed what the market expects of them both in the short and long term, sprinters meet short term goals, marathon runners meet long term goals, and out-of-shape runners cannot meet long term or short turn expectations causing their share prices to suffer. PPQs goal is to become a world champion over the next four years. Some of the ways PPQ can improve its market expectations is through creating growth options, improvement of core business performances, conducting a major restricting program, and sustaining its growth expectations. PPQ will increase its stock price by raising expectations about its long term growth. This can be realized through transparency, benchmarking, and using proper metrics so managers know when to anticipate performance improvements like total return to shareholders, price-to-earnings ratios, and market-to-book ratios. Retention Management PPQ is seeking ways to decrease annual employee turnover. Employee turnover is a common occurrence and be caused by different reasons such as job related stress, factors leading to the job stress, commitment to the organization, and job dissatisfaction. Dissatisfaction can be due to compensation, security, autonomy, or relationships with coworkers. Losing employees can be costly to an organization especially when the lost employee has the potential to be one of its star players. When an employee is replaced the new employee has to be inducted, trained, and developed at additional cost to the organization. This can be avoided when proper motivation, incentive, and cohesion are introduced to an organization. Retention management focuses on processes designed to encourage employees to remain with an organization for the maximum amount of time helping them along the way to realize their full potential and importance to the organization. Some of the ways to improve employee retention include financial support for education, stock investment plans, contract agreements, and employee suggestion plans (James et al., 2012). Another way to promote cohesion among coworkers and improve interpersonal dynamics, morale, and overall job satisfaction is through company funded volunteer programs. Volunteer Management PPQ is looking for ways to increase their charity during the transition period. One of these ways is through employee volunteer programs. These programs are funded, managed, and planned by an organization to help motivate employees to volunteer. They provide benefits to communities through programs such as helping inner-city children, homeless people, hospital patients, and environmental charities through volunteerism (Helping hands, 2011). Some of the other key benefits employee volunteer programs provide to a company include leadership development, skill acquisition, networking, corporate social responsibility, recruiting, retention, productivity, wellness, and brand recognition (Brenner, 2010). Because of PPQs commitment to benefit communities and China’s growing environmental concerns one of the volunteer projects the company would possibly fund or allocate resources to would be a global environment facility (Global Environment Facility, 2009) or an integrated coastal management program (Integrated Coastal Management Program, 2008) which are designed to mitigate some of the harmful side effects of industrial pollution to the environment and helps to promote biodiversity and sustainability in the area. Different groups already participate in these programs aimed at recycling hazardous waste in the area including companies like Sony, which sponsored a five-year plan to recycle all of its electronic products (Yang & Wang, 2009). China is the largest producer and consumer of hazardous byproducts of technology and has yet to find safe means to dispose of these products besides burying, burning, and acid treatment methods which cause damage to the atmosphere but also produce leachate, which can be detrimental to health once it finds its way into the local water table. References Brenner, B.K. (2010). Instituting Employee Volunteer Programs as Part of Employee Benefit Plans Yields Tangible Business Benefits. Journal of Financial Service Professionals, 64(1), 32-35 Bruckner, K., Leithner, S., McLean, R., Taylor, C., & Welch, J. (1999). What is the market telling you about your strategy? McKinsey Quarterly, (3), 98-109. China. (2003). Propaganda and Mass Persuasion: A Historical Encyclopedia, 1500 to the Present. Retrieved from credoreference.proxy.cecybrary/entry/abcprop/china CIA: World Fact Book: China. (2012). Central Intelligence Agency [Website]. Retrieved from https://cia.gov/library/publications/the-world-factbook/geos/ch.html Dewhurst, M., Pettigrew, M., Srinivasan, R., & Choudary, V. (2012). How multinationals can attract the talent they need. McKinsey Quarterly, (3), 92-99. Downs, L.J. (2012). Integrated Talent Management: Building a Strategy One Block at a Time. T&D, 66(8), 42. Entrepreneur’s Guide To Forming An Offshore Company in Hong Kong. (2012). Guide Me Hong Kong [Website]. Retrieved from guidemehongkong/incorporation/topics/hong-kong-offshore-company-formation-guide Ford China to Build $760 Million Assembly Plant in Hangzhou: Doubles China Passenger Car Capacity to 1.2 Million Units Annually. (2012). Ford [Website]. Retrieved from media.ford/article_display.cfm?article_id=36370 Global Environment Facility. (2009). The Princeton Encyclopedia of the World Economy. Retrieved from credoreference.proxy.cecybrary/entry/prewe/global_environment_facility Guangzhou or Canton. (2008). The Columbia Encyclopedia. Retrieved from credoreference.proxy.cecybrary/entry/columency/guangzhou_or_canton Heizer, J., & Render, B. (2012). Operations Management, flexible version. (Tenth ed.pp.254-255). Upper Saddle River, NJ: Prentice Hall Helping hands. (2011). Conference & Incentive Travel, 25. Associates Programs Source Plus, EBSCO host (accessed October 12, 2012). Integrated Coastal Management (ICM). (2008). In The Encyclopedia of Tourism and Recreation in Marine Environments. Retrieved from credoreference.proxy.cecybrary/entry/cabitrme/integrated_coastal_management_icm James, L., & Mathew, L. (2012). Employee Retention Strategies: IT Industry. SCMS Journal of Indian Management, 9(3), 79-87. Supply LINE. (2005). Automotive News, 79(6144), 28. Retrieved from search.ebscohost/login.aspx?direct=true&db=f5h&AN=16910296&site=eds-live&scope=site Yang, L., & Wang, H. (2009). Institutionalization Design in the Establishment of Recycling and Logistics Systems for Household Electronic Waste: Experience and Inspiration from Hangzhou Pilot Residential Communities. Transportation Journal, 51-56.
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