Chapter 14 – Human Resource Selection and Development Across Cultures
In-Depth Integrative Case 4.1: HSBC in China
1. How has HSBC adapted its global strategy to operate in China, both before and
after China’s WTO accession?
Answer: Prior to the WTO accession negotiations, China’s banking industry
operated as a cog in China’s centrally planned economy. The banks adhered to
directed lending practices from the government and in turn created some of China’s
most successful enterprises, but also supported thousands of other inefficient and
unprofitable state-owned enterprises. This practice left state commercial banks with
massive amounts of debt that was largely unrecoverable and hordes of
In December 2001, China finally acceded to the World Trade Organization (WTO).
A number of policies were immediately implemented such as foreign banks were
allowed to conduct foreign currency business without any market access
restrictions. Foreign banks were allowed to conduct local currency business with
foreign-invested enterprises. With its longstanding presence in China, HSBC was
among the most well-positioned financial institutions to take advantage of China’s
market opening. HSBC is an institution that actively seeks new opportunities;
HSBC was the first foreign bank to invest in China in 2001. In 2002, HSBC
inevitable that China will become a superpower. And indeed, desirable. And we are
positioning our business for the decades ahead accordingly.” HSBC recognized the
huge potential in the market for banking services, as well as credit cards. The
competition in China’s banking industry is continuing to grow. HSBC’s strategy is
to buy large domestic banks. By 2012, HSBC had 120 outlets in China, with a
branch network across 35 different cities.
14-38
Chapter 14 – Human Resource Selection and Development Across Cultures
2. Discuss HSBC’s strategy for entering and operating in other emerging markets.
Where has it found success, and where has it faced setbacks? Why?
Answer: HSBC implemented a strategic plan called “Managing for Growth” in the
fall of 2003. This strategy built upon HSBC’s global, international scope and
focused on the key customer groups of personal financial services: consumer
Since 2000, many of HSBC’s emerging markets’ profits have increased by leaps
and bounds. HSBC has had phenomenal success in Mexico. Mexico’s market is
expanding at a very rapid pace and in 2002, HSBC purchased the undercapitalized
Mexican bank Grupo Financiero Bital SA. HSBC’s plan includes offering credit
cards to a customer base that uses primarily debit cards.
assets into pesos. Argentina removed an 11-year-old mechanism pegging the peso
one to one to the dollar, which led to the peso’s sharp devaluation, and resulted in
massive losses for many banks.
In March 2008, HSBC won approval from the Vietnamese government to become
the first foreign bank to set up a locally incorporated entity. In 2009, the company
announced plans to increase its branches in Vietnam and to set up operations in
Laos and Cambodia.
14-39
3. What are the pros and cons of HSBC’s “Managing for Growth” strategy?
Answer: “Managing for Growth” aims to vault HSBC to the world’s leading
financial services company. One of the pros of this strategy is that it seeks to grow
earnings over the long term rather than expecting immediate results. Another pro is
that HSBC will be using its peers to set a benchmark or target for itself. The
strategy also consists of eight strategic pillars. Each of these pillars consists of a
4. How did HSBC withstand the world economic crisis? Was HSBC’s position
weakened or strengthened as a result of the crisis? What were the results of HSBC’s
group strategy in 2009? What regions were identified as new global opportunities?
Answer: The world economic crisis was especially devastating to the global
banking system. However, HSBC appears to have weathered the crisis much better
than many other players in the industry. The company even reported profits for
2008, albeit significantly lower than those reported for 2007. Emerging markets
continue to be a central focus for the company, and were instrumental in helping the
14-40
Chapter 14 – Human Resource Selection and Development Across Cultures
5. What is the core of HSBC’s current “Organic Growth Strategy” in China? Why did
HSBC decide to expand its financial services in China’s rural areas? What are the
pros and cons of rural expansion?
Answer: China was at the center of the new strategy outlined by HSBC in 2009.
The company plans to approach the market using two strategic initiatives. The first,
organic growth, involves organic business growth via its own branch network. The
second, strategic investments, involves creating value and synergies from the
company’s investment in strategic partners. This strategy was reaffirmed in 2010
In-Depth Integrative Case 4.2: Chiquita’s Global Turnaround
1. How would you characterize Chiquita’s historical approach to global management?
Answer: Historically, Chiquita adopted a highly centralized, purely ethnocentric
philosophy, where operations were carried out the same way everywhere, solely
motivated by profitability. The economic imperative has been emphasized. Since
14-41
Chapter 14 – Human Resource Selection and Development Across Cultures
2. Describe Chiquita’s approach to human resource management in its global supply
chain. What particular human resource challenges does Chiquita face as the
purchaser, producer, and supplier of a commodity?
Answer: Chiquita’s past approach has primarily treated its human resources in the
same way it dealt with any of its other resources. Decisions were solely motivated
by costs. This is one of the primary challenges that producers of commodities face,
as lack of brand recognition and opportunities for differentiation take away the
costly measures and standards may result in suppliers selling their output to
Chiquita’s less stringent competitors at lower prices and higher profits, causing
Chiquita to lose a substantial proportion of its supplies and market share to cheaper
competitors, with minimal human resource management initiatives.
3. Does Chiquita’s global corporate responsibility (CR) program create a conflict
between shareholders and other stakeholders? Who are Chiquita’s main
stakeholders in the United States and around the world, and how are they affected
by Chiquita’s CR program?
Answer: Conflict of interest across stakeholders is inevitable with any corporate
action, regardless of whether it is ethically responsible or not. The key is for the
organization to balance the interests of its diverse stakeholders based on their
human rights NGOs).
14-42
Chapter 14 – Human Resource Selection and Development Across Cultures
4. How would you characterize Chiquita’s past and present leadership? How does
leadership affect a company’s overall reputation?
Answer: Chiquita’s past leadership was primarily transactional. Present leadership
is more value-based, transformational, and ethically responsible, with a global
perspective and future orientation. This has led the whole company into a highly
5. Do you believe Chiquita would have changed its policies without the presence of
damaging stories in the media? If not, what does this say about Chiquita’s old
management style?
Answer: Answers may vary. Had Chiquita resorted to a short-term fix, it may have
restored its market position and profitability in the short-term. However, the long
run would have still been uncertain and risky. According to the case, one of such
6. What challenges does Chiquita’s new CEO face in continuing to turn the company
around and balance the interests of competing stakeholders?
Answer: As discussed earlier, Chiquita’s product is a commodity, and if consumer
responses are not supportive enough of Chiquita’s differentiation strategies, it may
lose the market to its fierce competitors. Moreover, the dependence on third-parties
for spreading the word around may not produce sufficient impact in terms of sales
14-43