International HRM: Cafe Pascuta's China Expansion Strategy, HRM11111

This report examines the international human resource management (IHRM) strategies of Cafe Pascuta, an Italian coffee bar chain, as it expands into China. The analysis begins by identifying key cultural differences between Italy and China using Hofstede's cultural dimensions, assessing their impact on HRM practices and managerial approaches. The report then evaluates the most effective IHRM staffing strategy for Cafe Pascuta, focusing on the EPRG model (Ethnocentric, Polycentric, Regiocentric, and Geocentric), and recommends a regiocentric approach. Finally, the report addresses the difficulties expatriates (PCNs and TCNs) may face adapting to the Chinese environment and suggests strategies to overcome these challenges, including training and acculturation programs. The report concludes with recommendations for Cafe Pascuta to successfully navigate the complexities of IHRM in the Chinese market.

HRM IN AN INTERNATIONAL
CONTEXT

Table of Contents
DISCUSSION.................................................................................................................................................4
A) Cultural differences between Italy and China and how this may impact HRM and managerial
practice....................................................................................................................................................4
b) Most effective IHRM staffing strategy to adopt.......................................................................................7
c) Difficulties expatriates (PCN’s & TCN’s) specifically may face adapting in China and ideas to
overcome these.......................................................................................................................................9
CONCLUSION.............................................................................................................................................11
RECOMMENDATIONS................................................................................................................................12
REFERENCES ..............................................................................................................................................14

EXECUTIVE SUMMARY
International HRM is describes as process of hiring and managing activities and
performance of companies at global level. The current study will be based on Café Pascuta,
which attempts to achieve strategic aims and business objectives while operating venture in
home town as well as in new nation and that is China. From this report it has been analyzed that
by using regiocentric approach of EPRG model and taking initiative to overcome challenges,
IHRM has successfully gained desire outcomes.

INTRODUCTION
International human resource management (IHRM) is defined as branch of management
approach that effects organizational human resource activities in cross cultural contexts.
International HRM contributes to manage varied people that are holding different cultures and
belongs to different regions, states and nations. It plays vital role in term of managing global
ventures and performance of their diverse workforce. In context of international ventures, IHRM
is considered as process of acquiring, planning and ethically utilizing human resources such as
workers at workplace. It provides varied benefits to global companies in several terms along with
above. The current assignment will be based on Café Pascuta, which falls under list of the most
famous Italian coffee bar chains. It offers excellent quality coffees and provide tasty Italian
pastries, to customers. The study will explain key cultural differences between Italy & China and
its impact on human resource management as well as managerial practice. Furthermore, it will
justify the most efficient international HRM staffing tactic to adopt and difficulties expatriates,
especially may face adapting in China and concepts to overcome these. Lastly, the report will
clarify appropriate suggestions based on overall analysis in context of challenges that IHRM
faced while setting up venture in new nation.
DISCUSSION
A) Cultural differences between Italy and China and how this may impact HRM and managerial
practice
As said by Aust, Muller-Camen and Poutsma (2018), there are various types of culture
which is followed in different countries. So, when organization expand in another nation the
culture difference highly impact on their HRM practices. It impact as there is change in ethics,
values, etc. of employees. Moreover, entire recruitment and training process is modified as well.
Thus, it is necessary for HRM to find out culture gap so that accordingly changes are done into
practices. Similarly, it is found that Cafe Pascuta is Italian coffee bar planning to enter in China.
They have already expanded in nations such as UK, France, etc. Therefore, in China it will
highly impact on their HRM practices due to cultural differences. There are certain models
which is used to find out cultural difference. It is as below:
Hofstede model- The model is used to understand difference between countries in cross
culture. This helps in assessing impact of culture on business practices. There are 6 dimensions

in it which is applied (Hofstede’s cultural model, 2020). Likewise, Cafe Pascuta has used this
model to find out difference in China and Italy.
Power distance- it shows that individual in society is not equal. The score of China is 80
which means inequality in society is accepted (Cooke 2018). Whereas Italy score is 50 which
means that equality and decentralisation of power and decision making must be there in society.
Individualism – It refers of degree of interdependence in society within its members.
The score of China is 20 so it means that there is high collectivist culture as people act within
interest of group but not for themselves. Italy score is 76 that means culture is not collectivist.
The people live alone and are having their own personal ideas and objectives in life.
Masculinity – this indicate that society is driven by competition, success and
achievement. Here, having low feminine score shows society care and value for others. Thus,
China score is 66 that means masculine society is driven by success. People will sacrifice family
and leisure time for work. Italy score in this is 70 which indicate masculine society. It is also

highly success oriented. In both nations success is shown through high status that is owing car,
house, etc.
Uncertainty avoidance- It means how society deals with fact that future is unknown.
The members feel exposed by unknown situation and try to avoid it. So, China score is 30 which
is low. It means Chinese people are relaxed with ambiguity (Farndale and Paauwe 2018). They
are risk taking and high tolerance for uncertainty. Here, Italy score is 75 which state people are
not relaxed with ambiguous situations. They do not take risk and is low tolerance for uncertainty.
Long term orientation – It describe how society has to maintain link with its past in
order to deal with present and future. The China score is 87 that means society is pragmatic in
culture. People easily adopt future conditions. Italy score is 61 in it which indicate Italian culture
is pragmatic. People adopt traditions and changed conditions easily and thrive for outcomes.
Indulgence – This is defined as extent to which people control their desires and impulse.
It allows people to enjoy life and have fun. There is low score of 24 of China so it indicate
restrained society. The people do not spend leisure time and control desires easily. Low score of
30 state restrained society. Here, we well the people do not spend leisure time and control desires
easily.
From above it can be analysed that there are certain cultural difference in Italy and China.
So, it may impact on HRM and managerial practice of Cafe Pascuta. Here, in China inequality in
society is accepted (Farndale Raghuram and Vidović 2017). This impact on HRM practice as
new policy, rules, etc. will be formed. Moreover, China is highly collectivist culture the
employees will act for group benefit. Thus, manager has to take decision in business interest. In
addition, employees can easily adopt changes. They can easily take risk to attain goals.
Furthermore, there will be impact on management and leadership practices as Chinese culture is
different from Italian one. It will also impact on other practices such as training of staff,
methods, process, etc. followed in café to deliver services. Hence, it can be found that Cafe
Pascuta will not have to face many challenges to expand in China as there are few cultural
differences in. Also, there will be moderate impact on HRM practice as culture of both nations is
similar. Besides, managers will not have to make a lot of efforts in their practice as well. It will
be easy for them to operate in Chinese culture.

b) Most effective IHRM staffing strategy to adopt
It is stated by Gooderham, Mayrhofer and Brewster (2019), Cafe Pascuta is planning to
expand in China so it requires for them to hire and recruit talented and experienced staff so that
they can perform task and attain goals. Thus, it required to develop an effective IHRM strategy
for that. This will enable in hiring right staff for right job role. Moreover, it is found that there
are different types of staffing strategies which is available in global HRM. But it depends on firm
requirement and needs.
Staffing is one of those functions for which international human resource management is
accountable and for which they chose specific tactic, adopt and implement for longer period of
time, which made them able to gain a lot of benefits in term of getting competitive edge within
new nation and that is China (Liu, Qingqing & Liu, 2021).
In the world of business, there are several types of models and concepts are available that
define varied kinds of tactics and approaches related to staffing. Here, EPRG model is used in
order to define variety of strategies that IHRM may use. This concept is especially designed to
be utilized in context of internationalization procedures of ventures and primarily addresses how
organizations like Café Pascuta view global management orientations. The model is stand for
Ethnocentric, Polycentric, Regiocentric and Geocentric (Olamade, 2020).
Figure 1: EPRG Framework
(Source: EPRG Framework, 2020)
Ethocentric approach-

It is one of those approaches that most of the Human resource management has used to
recruit people. By adopting and using this approach, HR may hire right individual person for
specific vacancy. International HRM, according to this method may get success while managing
performance of existing workers in new nation in term of hiring skilled and talented applicants,
who are able to contribute to gain competitive edge, which is quite beneficial.
Polycentric approach-
This method of EPRG concept is quite different from the above one as it drives the
attention of human resource management towards carefully and appropriately considering varied
markets abroad to determine host nations that may potentially offer the most unpredicted
benefits. It means that when Café Pascuta has a separate office and local headquarter overseas in
host nation that manages venture activities and operations in more nations, marketing tactics are
locally developed and implemented based on needs of local people.
Regiocentric method-
It is adopted by those companies who attempts to create and implement global strategies
for particular regions. Organizations that use this form of method may use it for areas in which
local venture is operated successfully. It may also use by those firms which operates their
ventures in home town or own region. Brands that utilize a regiocentric method varied times
believe that markets in certain region share common traits of market in home nation.
Geocentric method-
This method means that a venture strongly trust that it is possible to use one kind of tactic
for all nations, regardless of cultural differences. However, firms that use this method efforts to
develop items or offer services in a manner that best match national as well as international
consumers. It means that instead of trusting that their goods is excellent and valuable and that it
may sell in other markets.
Outcome-
Café Pascuta may use regiocentric approach of EPRG model, which is quite beneficial
for its venture and success within China where it start its journey as new coffee and tasty cookie
seller or provider. It used this method in term of identifying appropriate employees who are
capable and knowledgeable and able to provide many benefits to company which in return

increase the productivity and profitability. It is a kind of international staffing approach wherein
human resource manager select people from different nations lying within geographic region of
ventures. Café Pascuta may use it in effective and systematic manner (Tayali & Sakyi, 2020).
The best thing about this method is that it saves money in term of incurring less cost in staffing
or recruiting nations of host nation such as China.
c) Difficulties expatriates (PCN’s & TCN’s) specifically may face adapting in China and ideas to
overcome these
As elucidated by (Knies, Boselie and Vandenabeele (2017), when a firm expand in
other country they require staff. There are 3 types of people which company can hire such as
PCN, HCN and TCN. They are explained as below :
PCN- It is known as parent national country that is company recruit staff of its own
country. Thus, the country is known as parent country. For example- UK firm recruiting British
employees.
HCN- Here, when nation operate in another country and hire staff from that country. So,
nation is called as host nation. For instance- German company hiring Indians in India.
TCN- It is known as third country nation in which staff employed by company from
another country that worked in third nation.
From case study it has been found that Cafe Pascuta is expanding in China. For that a
general manager (PCN) will be heading toward China. Thus, all other staff who will be hired to
work in café will face various difficulties. Due to that, task may not be done in proper way.
Moreover, TCN’s will also face difficulty in working in café in China (Six Challenges for
Expatriate, 2020). Thus, difficulties are mentioned as below :
Language barrier- this is common difficulty expatriates can face in China. As the
language spoken by Chinese people is completely different so expatriates may not able to
understand it. Also, they may not be able to speak and interact with customers as well. This will
result in ineffective performing of tasks in café. This challenge will also affect on daily activities
to be performed by staff and taking orders from customers and delivering services to them.

Building relationship – it is also a difficulty that is faced by expatriates. Here, it may be
highly difficult for them to build relationship with co workers or neighbours. Alongside, as they
do not know about customs, ethics, etc. so it might be difficult for them to communicate with
customers and build relationship with them (Malik, Froese and Sharma 2020). In café, they
might not be able to share opinions, feelings, etc. with co workers and managers.
Understand culture and customs- this is also faced by expatriates. When they work in
China it will be difficult for them to understand culture and customs of Chinese culture. Due to
it, employees may not engage with customers and offer services. Along with that, it will be
difficult for them to adjust and adopt Chinese culture and work in café.
Adjusting to different business culture – For an expatriate, understanding and learning
a new business culture can be quite challenging. They might not be able to adjust new business
culture and work in effective way. However, it is always better to be flexible and have an open
mind. Thus, instead of being judgmental, learn to make appropriate decisions, and work best for
business.
Making new friends- This is also quiet difficult for expatriate to adopt in Chinese
culture as making friends is unfortunately not easy. The expatriates usually are aware about fact
that people move to various destinations and then leave. They are also shy at starting to talk to
other people. So, the friendships built during these years come to a halt when they depart.
Hence, these are various difficulties which can be faced by expatriates to adapt and work
in China in Cafe Pascuta (Gooderham, Mayrhofer and Brewster 2019). This will hamper on their
performance and career growth as well. So, it will take time for them to adjust and work in
business Chinese culture.
Thus, it is important to overcome difficulties which is being faced by PCN’s & TCN’s in
adapting in China. For that there are various methods that can be applied. They are explained as
Training – It is foremost way by which difficulty can be overcome. Here, staff can be
given effective training such as language, communication, etc. by which they are able to perform
task. Furthermore, by training employees will gain skills and knowledge about Chinese culture.
This will allow them to work in café easily.

Competencies – This is also a method by which difficulty can be overcome. Here, Cafe
Pascuta can improve competency of staff. In that competency skills such as decision making,
problem solving, communication, etc. can be enhanced. This will led to build confidence among
staff to work in Chinse culture. Besides, competency will inspire and encourage employees to
easily work in café.
Acculturation – It is also a method that can be adopted by employees. This refers to
process of learning and integrating values, belief, language, culture, customs, etc. of China. The
employee can gain knowledge about all these from internet (Knies, Boselie and Vandenabeele
2017). They can learn and practice it. With help of it they will be able to communicate and work
in China easily.
So, these are some ways by which challenges can be overcome that is being faced by
expatriates to work in China. They will get learn and understand about culture of country and
work accordingly.
CONCLUSION
From above study, it has been concluded that international human resource management
has played significant role in global companies, they has used varied strategies and approaches
which in returned made them able to successfully retained existing employees along with new
applicants. Human resource manager has contributed to overcome the negatives impact of
cultural differences. They has taken several actions to manage the performance of employees and
increasing their productivity within company, which is quite beneficial for employers, investors
and other key stakeholders. HR manager has motivated and encouraged each candidate, which
made them capable to perform productively whether employees work in Italy or china where
culture, working environment and other things are quite different. Furthermore, by summing up
above discussion, it has been summarized that HRM has taken many initiatives which in return
provides beneficial and useful benefits. Parent country national and third country nationals by
taking effective actions and developing useful plan has efficiently overcome difficulties that they
has faced while adapting in China. Along with these activities, HR manager with skilled team
members has hired new employees and build diverse workforce who has always contributed to
achieve strategic aims and business objectives and also supported in context of gaining
competitive edge.

RECOMMENDATIONS
Human resource management of Café Pascuta manage the performance of employees by
using the best approaches and concepts of strategic HRM. When company has operated in Italy,
HR manager contribute to achieve its goals and objectives. They may support firm when it plan
to open new outlet in China, for which human resource administration consider and adopt
effective suggestions that are following;
 It is quite difficult to manage diverse workforce at workplace in effective manner,
especially when company attempts to open its outlets in Beijing and Shanghai. At this
situation, HR manager can make arrangement related to training through which they can
generate cultural awareness among current employees as well as new.
 Along this suggestion, IHRM can also consider another approaches and techniques as
well in context of managing cultural diversity at workplace especially when they enter
into China and operate venture. For example, team work is one of the best and most
common methods that has been adopted by International human resource management
within varied companies to manage cultural differences and diversity as well as
performance of existing and new employees at workplace in new nation.
 Above two approaches or recommendations can help international HRM to manage
cultural differences between both nations and effectively sustain their business.