Cross-cultural Management and Communication in Woolworths Company in China

Running head: CROSS-CULTURAL MANAGEMENT AND COMMUNICATION
Cross-cultural management and communication
Name of the Student
Name of the University
Author Note

1CROSS CULTURAL MANAGEMENT AND COMMUNICATION
A brief overview of Woolworths Company
Woolworths Limited is a highly recognized retail organization in Australia. The company chiefly
offers various types of grocery items to the consumers that include vegetables, fruits, meat,
processed foods and others. Along with the supermarket chain, the company also retails liquor
and has a good number of takeaway outlets in Australia (Shinnar, Giacomin and Janssen 2012).
Woolworths is the second largest retail organization in Australia and has already expanded its
business in New Zealand as well as Tasmania. Recently, the management of the mentioned
company has noticed that the western retail market has got highly saturated. Hence, Woolworths
is planning to expand in business to South East Asia. The current target market of the Company
is China. However, The HR Department of the mentioned organization is highly concerned with
the expansion since several potential challenges may arrive during the mentioned expansion. In
this report, PESTLE analysis, as well as Porter's five forces analysis, will be performed in order
to identify the macro as well as the microenvironment of the retail industry in China. Along with
that several potential HRM issues that can impose impact o the business of Woolworths in China
will be identified. Moreover, a brief Hofstede Cultural competence analysis between the home
and the host country will be performed in the report. Lastly, this report will contain a
recommendation for the company for efficiently deal with the identified issues.
Identification of key macro and microenvironmental factors and issues that impose an
impact on the retail market of China
Analysis of the Macro environment

2CROSS CULTURAL MANAGEMENT AND COMMUNICATION
In order to establish its business successfully, Woolworths needs to access the external
environment of the retail industry of China. This will not only help the company to identify its
loopholes but will also help it develop strategies to deal with the identified issues.
PESTLE Analysis
Political Factor
The government of China does not consider the retail industry as prestigious as any other
industries like the Hospitality and tourism industry. As a result of that, the retail industry is not
sanctioned like other heavy weighted industries in China (Chand, Cummings and Patel 2012).
Along with that several rules and regulations are implemented by the government recently, to
convert all the street markets to submarket. This action of the Chinese government has resulted
in reducing trade barrier for the foreign market. This factor will impose a positive impact on
Woolworths since fewer barriers will help it to expand its market in the host country.
Economic Factor
Although the overall Gross Domestic Product growth of Chinese the retail industry has dropped
by 8.2 percent in the year 2017, the demand for grocery products in China has got enhanced in
China (Hofstede Insights 2018). Moreover, the overall wage growth of the consumers has
resulted in a rise in consumption of both utilitarian as well as premium products. Since,
Woolworth is a highly recognised for its superior quality of products, this rise in demand will
help the company to expand its business.
Socio-cultural Factor

3CROSS CULTURAL MANAGEMENT AND COMMUNICATION
The Chinese population, though a strict follower of their culture, have high adaptability. They
are more concerned about the quality of the product rather than whether the company offering
the product is Chinese or not. However, several international countries failed miserably since
they were not able to incorporate Chinese culture into their business (Zalengera et al., 2014).
Technological Factor
The technological advancement of China is not as high as developed countries like the US, UK
and Australia. Hence, retail companies in China are often found to suffer from difficulties to find
efficient suppliers (Arli et al. 2013). Therefore, the company should build and maintain good
communication as well as the relationship with the local suppliers to obtain a competitive
advantage in the retail industry of China.
Legal Factor
In China, the government has established several policies and procedures for controlling
monopoly and power of the consumers. Moreover, several rules and regulations implemented by
the Chinese government impose a negative impact on the access to raw materials (Chhabra and
Kiran 2015). This will impose a negative impact on the expansion of Woolworths.
Environmental factor
Due to the rise of pollution in China to a great extent in recent years, the Chinese government
has put a ban on the usage of plastic. As a result of this, Chinese retail organizations are using
biodegradable plastic packaging along with paper and Jute packaging. Hence in order to gain the
trust of the government as well as consumers, Woolworths must abide by the mentioned
environmental regulations.