Case Study on OBI Stores

CASE STUDY ANALYSIS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Best fit and best practice dilemma in going from multi- domestic to transnational strategy......3
Impact of shift from multi- domestic to transnational strategy on organization's culture..........4
Issues from headquarters perspective..........................................................................................5
Subsidiary needs..........................................................................................................................5
Arguments that whether the approach was successful in achieving the needs of both...............5
Propose and justify actions that HR will need to focus..............................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Human resource refers to the workers or employees who are working within the
company. For a business to be successful it is very essential to have a sound and efficient
workforce because the success of company depends upon the working quality of the employees.
The resent case study is based on company OBI stores (Thompson, Strickland and Gamble,
2015). This company is a multinational company based in Germany which was founded in the
year 1970 by Dr. Emil Lux and Manfred Maus. The company deals with home improvement
retailing supplies and the largest DIY retailer in Europe where DIY means. The report will start
by outlining the best fit and best practice dilemma while opting for transnational strategy.
Further it will show the impact of this shift on the company's culture. Next it will discuss the
issues from perspective of headquarters and needs of subsidiaries. Furthermore, it will lay some
arguments that whether the approach was successful or not. At last the report will propose some
actions HR needs to focus on.
MAIN BODY
Best fit and best practice dilemma in going from multi- domestic to transnational strategy
There are many ways through which the company OBI can go from multi domestic to
transnational strategy for expansion of business. Because there are so many options available for
operating at transnational level so there always exist some dilemma that which are best fit and
best practice for transnational business.
Best fit- these are the options which are suitable for the company according to the present
condition of the company (Mathers, Hawkins and Lee, 2019). Some option of best fit for going
transnational are as follows-
Franchise- it is a method of going transnational through which the company wishes to
expand its business across the geographical boundaries. Under this method the company licences
all its procedures that is how the company works, its knowledge, all the rights and intellectual
property are to someone else and that person operates in the name of that company. In return that
person has to follow all the criteria of franchisor and has to pay certain fees in order to use its
licence.

Merger- another method is going for merger with another similar company operating in
any other country (Hawkins, Holden and Mackinder, 2019). It is a method in two or more
companies agrees to come together and do business together by sharing all the resources and
assets and also shares all the profits and losses.
Best practices- these are the methods which the company feels appropriate for earning profits.
Some of them are as follows-
Joint venture- it is a scheme wherein two companies comes in together to accomplish a
particular objective and as ans when that objective is achieved the joint venture will come to an
end (Della Porta and Reiter, 2016). The major reason behind joint venture is only the completion
of the task or project for which the different companies have come together.
Acquisition- it is yet another practice for going transnational wherein one company
acquires the other country. Here generally there are two companies involved the one which is
bigger which tries to acquire the other company which is small.
Because of the dilemma the business will go for best practices of joint venture and
acquisition. This is because of the major reason that the company for choosing both these options
will get rewards in form of certain advantages. Like the advantage of using joint venture is
because of the reason that in joint venture the companies are in contact only till both of them
achieve their objectives. As the objectives are achieved the joint venture finishes. On the other
hand with help of acquisition the company is rewards with the increase in the market share with
minimum cost and maximum returns.
Impact of shift from multi- domestic to transnational strategy on organization's culture
When a company goes from a multi- domestic to a transnational business it has to face
many types of issues that affects the profitability of the business. The major impact from this
shift is on the culture of the company. This is majorly because of the reason that every country
has its own culture and way of working so it is difficult for a new company to adjust in new
culture. For studying the impact of shift on culture Handy's model have been used.
Power culture- it is a type of culture in which all the powers to take decision lies in the
hands of only few experienced people. But because of the shift to another country that is in
Germany there is the culture of power which follows the principle of decentralization which
means that decision making power is in hands of all the person within the company. So this
culture prevalent in Germany also prompts the company to be decentralized

Role culture- in this type of culture in which the responsibilities and roles to be
performed by every employee is decided in advance only. But in many countries like Germany
which is the headquarter the roles and responsibilities of the employees depends on the situation
at the time of performing the job. This is majorly because of the reason that the working
environment is very dynamic and ever-changing (Abner, Cooperrider and Goldin ‐ Meadow,
2015).
Task culture- it is a type of culture which promotes the distribution of work according to
the capabilities of the employees. But in many companies this liberty is not given. The task is
allotted according to the choice of the manager or supervisor. So here comes the difference in
culture because of adoption of transnational strategy. Like in Germany the task culture is much
popular as a basis of allotting work.
Person culture- under this type of culture the employees are given total freedom of doing
work and choosing the way of working (Yerznkyan, Gassner and Kara, 2017). But this type of
culture is not much prevalent in many countries. So this also impacts the working of company
because there might be possibility that OBI is very centralized but in the country such as
Germany, in which it has shifted is very decentralized in its working style then it will impact the
culture of OBI and the employees of OBI will also demand for decentralized working culture.
Issues from headquarters perspective
When OBI went for different options for the expansion in the international market like
franchising, joint ventures, mergers and acquisitions and many other options. Then it created a
problem for the HR of the company because there was much problem in recruitment and
selection of employees within the company because there was no standardized form of
recruitment for every country's company. Also, there were many types of difference in the raring
scales used to rate the employees, problems in performance evaluation process. The another
major issue from perspective of headquarters is the use of differing practices in different
country's branches affects the quality of the work performed by company. No standardized
Human resource management practices were there and it existed then no country followed it.
Subsidiary needs
All the subsidiaries of the company all over the globe needs to have a standardized
system of recruitment and selection and also a single common system of rating and performance

evaluation is required in all the countries. The need of recruitment and selection as a common
system of rating is the major need of subsidiry because of the major reason that this
standardization will promote uniformity in all the companies of OBI all over the globe in the
methods of selection and recruitment. This will be treated as a common basis for comparison of
all the companies all over the globe.
Arguments that whether the approach was successful in achieving the needs of both
So for catering to the issues faced by the headquarters and the needs of subsidiaries OBI
has taken certain steps or has used certain approaches to solve the problems faced by the
company. According to case study's facts Internation Human Resource Mangement, (2012), the
first thing which company decided to do is to go for centralization. This means that now the
decision - making power will rest in the hands of many few people. Another strategy which OBI
decided to do is to set headquarter in each country which will cater to the needs of all the
subsidiaries present in that country (Duarte, Marcondes and Carneiro, 2019). The last thing
which the company decided to do is to make company's organizational units like HR
headquarter, HR manager who will collect and analyse all the data relating to all the HR
practices and then creating guidelines for all the HR practices used and then apply to all other
countries.
These three steps were taken by company in order to accomplish the needs of both
headquarter and the subsidiaries. Out of all the three steps the first one that is centralization is not
a good strategy adopted by company OBI. This is majorly because of the reason that
centralization means power to take decision rest in hands of few people only. And this promotes
a bureaucratic leadership within which the dictator rules the whole organization employees do
not have any right in decision - making process.
The second approach was setting headquarter in every country is a good practice. This is
because of the reason that if each county has its own headquarter then it will approach to that
headquarter only. This is beneficial because of the reason that if every country will have its own
headquarter then it will save time because now it has to look after only the branches which
comes in same country. So it will save time of both headquarter and the subsidiaries as
headquarter has to look after limited subsidiaries and on the other side the subsidiaries have to
just go to the country's headquarter and not headquarter which is handling all the operations of
OBI and every country.

The last approach selected by OBI was to standardize and unite all the human resource
management practices to one only. That means that all the human resource management
practices used by OBI and all its branches all over the globe will be same. This is done in order
to make sure that there is a standard practice followed all over the branches. This will help
company in comparing the performance of different branches of company across different
countries where it operates (Bilecen, Çatır and Orhon, 2015). Also, if there will be standard
policies used then it will be helpful for other headquarter to have access to the performance of
rest of the branches.
Propose and justify actions that HR will need to focus
With the above discussion all the problems and the solutions which OBI took in order to
solve the problems were highlighted. But other than these solutions it can use many other things
and measures like as discussed below-
 The first and foremost thing which the company must ensure is that it must use proper
communication tools in order to communicate the policies and procedures followed by
the main headquarter (Donate, Peña and Sanchez de Pablo, 2016). Clear communication
will ensure that there is no mismanagement and everything works in a planned way.
 Another thing which the company can do is to time- to- time check the focus of the
company and its employees is on the completion of work or not. And if the focus is not
accurate then the HR needs to take some corrective actions in order to match the working
of the employees with the goals of the company.
 The company can make use of many various types of Enterprise Resource Planning
(ERP) such as Oracles Financials, Ramco's Marshal, SAP and many other different types
of software in order to assist in people of HR department.
 Also, the company must ensure that it uses a standard form of recruitment for recruiting
candidates in all its branches all over the world so that there is uniformity in the working
patterns of the company (Tzabbar, Tzafrir and Baruch, 2017).
CONCLUSION
With the help of the analysis and evaluation of the report it can be interpreted that it is
very crucial and necessary to have sound and good human resource management practices is
very necessary for the business to be successful. The present report highlighted some of the best
fit and best practice for transnational strategy like joint venture, merger, franchise and many

more. Next it discussed the impact of shift on the culture of the organization with the help of
Handy's culture model. Further it discussed the needs of headquarters and the subsidiaries of
OBI. After that it outlined the arguments relating to that whether the approach used by company
was successful or not. At last the report proposed some actions which the HR of company can
take to improve its condition.

REFERENCES
Books and journals
Abner, N., Cooperrider, K. and Goldin ‐ Meadow, S., 2015. Gesture for linguists: A handy
primer. Language and linguistics compass. 9(11). pp.437-451.
Bilecen, B., Çatır, G. and Orhon, A., 2015. Turkish–German transnational social space: stitching
across borders. Population, Space and Place. 21(3). pp.244-256.
Della Porta, D. and Reiter, H., 2016. The policing of transnational protest: A conclusion. In The
policing of transnational protest (pp. 185-200). Routledge.
Donate, M.J., Peña, I. and Sanchez de Pablo, J.D., 2016. HRM practices for human and social
capital development: effects on innovation capabilities. The International Journal of
Human Resource Management. 27(9). pp.928-953.
Duarte, É., Marcondes, D. and Carneiro, C., 2019. Facing the Transnational Criminal
Organizations in the South Atlantic. In Maritime Security Challenges in the South
Atlantic (pp. 11-40). Palgrave Macmillan, Cham.
Hawkins, B., Holden, C. and Mackinder, S., 2019. A multi-level, multi-jurisdictional strategy:
Transnational tobacco companies’ attempts to obstruct tobacco packaging
restrictions. Global public health. 14(4). pp.570-583.
Mathers, A., Hawkins, B. and Lee, K., 2019. Transnational Tobacco Companies and New
Nicotine Delivery Systems. American journal of public health. 109(2). pp.227-235.
Thompson, A., Strickland, A.J. and Gamble, J., 2015. Crafting and executing strategy: Concepts
and readings. McGraw-Hill Education.
Tzabbar, D., Tzafrir, S. and Baruch, Y., 2017. A bridge over troubled water: Replication,
integration and extension of the relationship between HRM practices and organizational
performance using moderating meta-analysis. Human Resource Management
Review. 27(1). pp.134-148.
Yerznkyan, B., Gassner, L. and Kara, A., 2017. Culture, Institutions, and Economic
Performance. Montenegrin Journal of Economics. 13(2). pp.71-80.
Online
Internation Human Resource Mangement. 2012. [Online]. Available through:
<https://ebookcentral.proquest.com/lib/vu/reader.action?docID=716523&ppg=447>