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Case Study:Acquisition Of Pancevo Brewery By The Eden Beverage Group Featured

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Case Study:Acquisition Of Pancevo Brewery By The Eden Beverage Group


Introduction

This case revolves around the acquisition of Pancevo Brewery by the Eden Beverage Group. Although the joint venture sought to enhance the financial performance of the new firm, numerous challenges are evident. Most of these challenges pertain to cultural barriers, change management, and communication. This is in direct relation to human resources. Cultural barriers have an inherent capacity to significantly undermine the performance of any corporate entity. The new venture had to integrate employees from diverse backgrounds. Although most executives from Pancevo Brewery were Serbian nationals, they had to work closely with other expatriates drawn from other nationalities.


 Change management is another significant challenge to human resource as pertains to this case. Employees from both organisations had been used to some practices which are traditionally connected with their respective organisations. However, organisational developments in the joint venture focused on change management. Such changes pertain to the wage structure, code of conduct, and trade unions among others. These dimensions of change management are significantly challenging from the perspective of human resource management and international industrial relations. This analysis narrows down on the problems while also assessing the potential causes. This will be largely based on a cross cultural and a human resource management stance.


Cultural Barriers

The human resource challenges evident in the joint venture can be strongly attributed to cultural barriers. Both the two entities have distinct histories from the perspective of employee relations as well as organisational practises. The Eden Beverage Group has strong Turkish roots as evidenced by its listing on the Istanbul Stock Exchange. On the other hand, Pancevo Brewery is characterized by a rich Serbian tradition. These traditions highlight the cultural diversities evident in both organisations. This serves as an outstanding source of human resource challenges for the new venture. Cultural barriers cause challenges from a human resource perspective in different ways (Edwards, 2007). Firstly, the executive and employees from different backgrounds might struggle to agree on numerous organisational issues.


 The employees of Pancevo Brewery had been used to social benefits prior to the company’s acquisition by ECG. In contrast, the workforce at ECG had been used to a culture of performance-based remuneration. Due to these kinds of differences, employees from the diverse backgrounds might struggle to adapt to the organisational culture in the new corporate establishment. In most cases, people from different cultural backgrounds are characterized by distinct values and approaches to tasks. When employees have conflicting values, it is considerably complex for them to agree on numerous issues. This perspective is a massive challenge to the joint venture especially from a human resource management point of view (Guest, 2010). The organisation can struggle to work towards its goals if the employees are characterized by distinct values. Cultural barriers can also significantly hamper the efficiency attained within the decision making process. For a multinational entity like the Eden Brewery Group, each decision has extensive ramifications on overall performance.

All these perspectives indicate how cultural barriers have curtailed the human resource framework at Eden Weisser. In order to address these challenges, the organization’s human resource executives must develop comprehensive frameworks for training all employees. Through training, all employees are enlightened about the pertained role played by cultural diversity within an organization.


Communication

In addition to cultural barriers, communication is another challenge evident in the case study. When ECG acquired Pancevo Brewery in 2003, a joint transition team was established. The team was mandated with numerous duties. For instance, this team was responsible for overseeing organisational integration. In line with such roles, communication is a sensitive aspect. Without adequate communication mechanisms, the joint venture would struggle to attain the different organisational goals. The human resource frameworks in any organisation are strongly dependent on the available platforms for communication (Rao, 2008). The transition team at Eden Weisser was characterized by specialists drawn from different fields. The absence of effective communication is among the most conspicuous causes of the problems faced by the organisation’s human resource systems.


 The communication platforms should be established in a way that enables even the subordinate employees to express themselves. This perspective is massively influential in terms of streamlining the efficiency of decision making. The communication strategies used by the human resource managers also influences the organisation’s public relations framework. In the wake of the acquisition, the organisation embarked on an extensive rebranding framework. For instance, the organisation was involved in a re-launch of the Weisser brand. Such a rebranding process requires adequate communication tactics (Dowling, 2008).

However, the organisation did not establish comprehensive mechanisms for streamlining internal and external communications. Consequently, these aspects highlight communication as a significant cause of the challenges experienced by the human resource mechanisms at Eden Weisser (EW).


Change Management

Change management encompasses the processes which form the basis of significant transformations within an organisation. In the absence of adequate mechanisms, change management can be considerably challenging. This mostly applies to the implementation phase. After the acquisition process, the employees in this organisation faced uncertainty in terms of job security. Previously, the employees at Pancevo Brewery were entitled to numerous social benefits. Although the wages were significantly lower, the standards of job satisfaction were exceptional (Briscoe, 2012). However, the acquisition of the company by EBG created another dimension for remuneration and reward of employees.

In line with the new provisions, employees of EW would be paid based on performance. Inevitably, this created an element of job insecurity among most employees. This can easily demoralise employees and thus compromise their performance. In order to mitigate such challenges, it is pertinent to establish effective mechanisms for change management. Through change management, some challenges such as dissatisfaction among employees can be averted. Some of the most profitable organisations across the globe are characterised by exceptional mechanisms for change management.


Disparities in Earnings

The joint venture comprising of the two breweries is characterised by disparities in earnings. For instance, the average worker rates are ten times less than the earnings given to the high ranking executives. In line with this perspective, disparities in earnings have significantly undermined the levels of job satisfaction among employees. Such a scenario is a massive challenge for any human resource manager. Although the performance of organizations is among the most pertinent goals, it cannot be achieved without motivating employees (Edwards, 2007). Consequently, the human resource executives must act accordingly in order to address such a challenge. Although the top executives should earn more, the disparities should not be so high. The high disparities in earnings can also undermine the effectiveness of internal communication mechanisms among employees of different ranks. The attainment of the relevant organisational standards can also be undermined significantly by the disparities in earnings (Guest, 2010). This is because some employees consider themselves irrelevant to the overall targets being pursued by the organisation.


 Strategies for International Human Resource Management

The strategies used for international HRM are massively influential towards the overall performance attained by a multinational entity. The acquisition of Pancevo Brewery by ECG led to the creation of a multinational entity whose activities span across six nations. With business and commercial interests across different countries, it is vital to develop adequate strategies for international human resource management. At the international level, cross-cultural perspectives are immensely pertinent. For instance, the organisation must use an international HRM strategy that accentuates on the values of cultural diversity within an organization (Edwards, 2007).


 The employees of the joint venture were drawn from different nationalities. It is thus imprudent for the organisation’s human resource system to be biased in any way. Additionally, it is essential for the organisation to consider the values of the different cultures while making decisions as pertains to the marketing strategy. Such an approach helps a multinational entity in establishing a foothold in the different market. It is also essential for any multinational entity to assess the human resource standards used within an organisation. This is an essential aspect especially in terms of boosting the company’s performance in the foreign markets. The beer industry is strongly dependent on the ability of the organisation to execute sales strategically. This perspective accentuates why the joint venture needs to implement adequate mechanisms for international HRM. For instance, aspects such as communication must conform to the respective human resource practices in the host country (Dowling, 2008). Conforming to such standards is also pertinent in terms of enhancing that the company secures adequate licensing. Countries in the Balkans and Eastern Europe have stringent frameworks for human resource management. Consequently, EW must conform to such standards.


 Conclusion

The case study narrows down on the causes of the various human resource challenges experienced by the Eden Brewery Group after acquiring Pancevo Brewery. The Eden Beverage Group has strong Turkish roots as evidenced by its listing on the Istanbul Stock Exchange. On the other hand, Pancevo Brewery is characterized by a rich Serbian tradition. These traditions highlight the cultural diversities evident in both organisations. This serves as an outstanding source of human resource challenges for the new venture. Cultural barriers cause challenges from a human resource perspective in different ways. Firstly, the executive and employees from different backgrounds might struggle to agree on numerous organisational issues. Without adequate communication mechanisms, the joint venture would struggle to attain the different organisational goals. The human resource frameworks in any organisation are strongly dependent on the available platforms for communication. The transition team at Eden Weisser was characterized by specialists drawn from different fields. The absence of effective communication is among the most conspicuous causes of the problems faced by the organisation’s human resource systems.


 After the acquisition process, the employees in this organisation faced uncertainty in terms of job security. Previously, the employees at Pancevo Brewery were entitled to numerous social benefits. Although the wages were significantly lower, the standards of job satisfaction were exceptional. However, the acquisition of the company by EBG created another dimension for remuneration and reward of employees. The acquisition of Pancevo Brewery by ECG led to the creation of a multinational entity whose activities span across six nations. With business and commercial interests across different countries, it is vital to develop adequate strategies for international human resource management.


 References

Edwards, T. (2007). International human resource management, Pearson Education

Guest, D. E. (2010). Human resource management and performance, Human Resource Management Journal, 21(1)

Rao, P. L. (2008). International human resource management: Text and cases, New Delhi: Excel Books

Dowling, P. J. (2008). International human resource management, Mason, OH: Cengage Learning

Briscoe, D. (2012). International human resource management, Boca Raton, FL: CRC Press


 

Last modified on Wednesday, 27 November 2013 11:22
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