Term Paper on "International Human Resources Management"

Term Paper 12 pages (4436 words) Sources: 1+

[EXCERPT] . . . .

International Human Resources Management

Second Assessment

This is a plan for an established Australian commercial organization about the methods through which they should establish a pharmaceutical organization in South Korea. Regarding the question of funds, it has been assumed that the funds have already been arranged. The proposal is meant for the study and evaluation by senior executives for the purpose of discussing the nature of organization to be set up, the person from within the organization to be deputed for discussions with the South Korean representatives, and the facilities that should be available in the organization to be established in South Korea.

The information for the purposes of this study has been collected from reliable international and Australian sources and their experiences about business operations in South Korea. Part has also been taken from the opinions of the Australian authorities regarding methods of business dealing with South Koreans. The information has been collected and the results assembled in the form of this paper.

Discussion:

South Korean behavior and cultural etiquettes are not exactly the same as amongst Australians, and the first step is to note the differences while dealing with them. Entire culture and beliefs of South Koreans are based on the beliefs that were given by Confucius and that involves respect for superiors and parents, duty to the family, loyalty to friends, humility, sincerity and courtesy to all persons. (Korea Profile) This is the types of behavior that Koreans are comfortable with and would also expect from others. Apart from this there are certain established hierarchies that are established in Korea and will be always observed by its people.

For starting any business relationship with Koreans, it is important that there is a formal connection that is established with the Korean party. Thus for the first business meeting with the prospective business associate, it is better for the introduction to be done through an intermediary. The higher the social importance of the intermediary, the better is the chances that the meeting will take place with the right person. Just fixing up a meeting and going and meeting the person will not result in any deals being finalized. (Korea Profile) Thus before making any visits, please make sure that an important person will be available to make the necessary introductions.

Along with this is the importance that visiting cards have to Koreans. When a Korean organization is formed, there are places for all persons involved in the business hierarchy. When any discussions are being started with a Korean, the Korean individual will not be comfortable till the position and other details from the Australian side are made clear. It is better to leave the business cards in front of the Australian person so that it can be referred to easily. It is better to have the card in Korean with a translation of the name and title, but often an attempt to translate directly into Korean may be problematic. When one talks about a managing director, it is the same as saying president in Korean. Another important point is the relationship between the countries in the region, and for this purpose, a card in Japanese should never be used in Korea. (Korea Profile)

Another important point in the success of building a relationship in Korea is having a human relationship with the individuals with whom business has to be done. These are through relationships and that can be developed through meetings at informal social gatherings with considerable amounts of eating and drinking. It is also possible to continue discussions of business in such gatherings, and the atmosphere will be a lot friendlier. In Korea, individuals are also likely to discuss business over dinner. On the other side, it is not so important for legal documents to be made immediately as trust is the most important in all business dealings. Koreans generally treat most documents as Memorandums of Understanding that is in spite of all specifications or complications of the deal, the legal documents are only the broad outlines of the relationship. (Korea Profile)

On the other hand, Koreans are very sensitive to keeping their face, and one of the ways in which they lose face is if they are insulted or criticized when others are present. Even if they are from a smaller company, they should not be treated as juniors in front of other, if they have a high status within their own company. It may even be required to raise sensitive matters through the intermediary who had first made the introductions. In general Koreans have a reputation for being good negotiators, and thus in the course of negotiations, one has to be patient and gentle, but firm. One has to maintain their own position but should not push too hard, and there will be negotiations for every concession that is wanted from them, as Koreans are persistent and generally like others who are also persistent. Another problem may be in being understood, and minutes may be exchanged after every meeting to ensure that all points have been understood by both the parties. Even when there are only courtesy calls, the custom in Korea is to provide corporate gifts in the form of ties, pens, etc.

Well now that the question of dealing with Koreans has been dealt with, let us talk about the business on hand. The first matter to be looked in was the situation of the pharmaceutical industry in Korea. This showed certain problems to be uppermost. One of them was a change in laws regarding the distribution of medicines in Korea. The second problem is regarding the nature of manufacturers in Korea, and it is seen that they have almost the same product mix and rely on low prices to sell their products. This is suitable for a new organization from Australia which is coming in as it does not suffer from the same shortcoming, but it may be worth looking at another question is whether it will be worth looking at the possibility of taking over some of the existing units producing medicines in Korea, but have closed down due to their inability of meeting competition. Since the operation is thought to be in terms of a joint venture, this may be possible.

This will also help in terms of the distribution network as all manufacturers in Korea have their own distribution network, whereas the practice in other countries is to go through a common network, with general distributors of pharmaceuticals. This is not the practice in Korea. The individual distribution and competition in terms of price also leads to very high competitiveness in terms of price and the margins become very low. The provision for R&D is cut to only 3 to 4% of turnover as compared to 12 to 20% that is available in other markets. (Survival strategy for pharmaceuticals) The distribution costs for pharmaceutical industry is higher than many other industries, and there are costs even to set up the channels as required in South Korea. It may be better to look at the possibilities of setting up the unit there only for export, and if the product has to be sold there, then an initial development for the brand name is required through continuous efforts for quite a few years prior to the actual opening up of operations in South Korea.

Regarding area of collaboration that joint efforts have been most successful in South Korea has been the area of Research and Development. This should certainly be pursued in this new venture, as this is one area in which their successes are of note and likely to be less expensive to operate than in Australia. It has also been seen that most South Korean companies are keen to partner foreign companies where there is R&D as also licensing agreements for producing drugs. It is also felt by the South Korean entrepreneurs in pharmaceutical industry that collaborative efforts in R&D would be beneficial for the entrepreneur in the long run. There are certain instances to show that pharmaceutical R&D in South Korea can be innovative, and there have also been instances when they have taken over development of drugs that were not pursued by American companies and succeeded in finally developing the drug.

The quality of production has been seen to be excellent in conditions that are suited to the country. This means that a lot of training has to be provided. This involves costs and that has to be considered when planning for the plant. The level for excellence as seen in an example of another product is that al most 25% of the workers or teams have to be left apart for training and development. In spite of the quality of production, this factory ends up spending the highest among all such companies for their labor. They also had changed their system in 1994 when it had led to a disturbance in terms of stoppage of work. The factory also works for the maximum number of days in… READ MORE

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