Management: Choithram Supermarket Case study
- Hits: 8557
Management: Choithram Supermarket Case study
The modern environment in which organizations are operating in is highly dynamic and some internal and external forces are constantly changing the rule of the game. This means that organizations can only remain relevant and competitive in the fast changing commercial environment by creating strategic plans (Grace 78). Changes in the strategic plans of a firm always affect the functioning of various departments and one of the departments that are highly affected is the human resource management. The HR departments in most organizations have undergone transformation in their functions to ensure that they encompass the goals and the visions of the organization. This is why a new concept that is referred to as Strategic Human resource management has emerged in the HR arena (Arthur 23). Strategic human resource management is a method that is used in the management of the human resources of organizations. It is relatively new concept that entails designing and implementing some policies that ensure that the human capital of the organization is used to achieve the strategic goals of the organization (Martin 79).
TASK ONE: Strategic Plans: Case Study
Choithram Supermarkets is a supermarket base in the Middle East and is one of the largest in the region. It was first established in Sierra Leone in Africa as a trading company before spanning into Europe, Gulf region and North America. Its first supermarket was first established in the UAE in 1944 (Adam, 24). The supermarket is currently facing fierce competition from new entrants in the market forcing it to keep adopting strategies to keep its competitive advantage in the face of the modern retail battle. However, it remains the most formidable supermarket in the Middle East serving more than 20 million residents of more than five countries in the region. One of the competitive advantage that the supermarket has over its rivals is the international presence of its mother company meaning that the supermarkets has supply chains allover Europe and North America, which ensures that there is a wider range of goods in its shelves that the competition can provide. Another competitive advantage is customer loyalty because majority of the customers especially the older generation are reluctant to savor the new entrants in the retail trade and have shown their willingness to stick with the brand that they have identified with for decades. The supermarket has more than 90,000 employees most of them being in the UAE (Adam, 24)
One of the strategic plans of the Choithram Supermarkets is fighting off the stiff competition that has been brought by the new entrants. The largest threat to the supermarket now is the newly opened Dubai Marina Mall that has eaten into the traditional market share and niche of the Choithram Supermarkets (Mohammed, 16). To remain competitive especially in the global city of Dubai, the supermarkets plan for the next two years is expansion. The Choithram supermarkets want to be present at every corner of every big town in the middle easy especially in the |UAE to ensure that its market is not highly threatened by the new entrants. Establishing entirely new supermarkets will not be an easy task and the major plans that this retail giant has is to make to acquire middle level supermarkets that are strategically placed in the major towns. These supermarkets on targets are the ones that have a good customer base and their plans and visions are in line with that of Choithram (Adam, 3). There are more strategic plans for expansion into other zone especially the former Soviet Union states like Georgia, Kazakhstan, and some East Asian counties like Taiwan, Indonesia, Malaysia and Hong Kong. The supermarket has started carrying out feasibility studies in North Africa countries and its first branch in Egypt may be opened by the end of the year 2011. The other strategic plan that the supermarket has laid out is to study the operations of the Walmat supermarkets and try to align its operations with that of the world-leading retailer as it sets out to expand and make acquisitions. Walmat has made successful expansions allover the world and has made very high profile acquisitions and the Choithram plans are to emulate the expansion and the acquisition policies of the world-leading retailer. This is to ensure that it remains competitive in the middle east and all the other locations it has planned to venture since it doesn’t have a supermarket in any area that walmat has, meaning that it is not one of its threats (Mohammed, 17).
One of the reasons why the Choithram supermarket is facing stiff competition from the new entrants is because of its slow speed in the adoption of the modern technology as opposed to the competition that has the state of the art technology (Mohammed, 16). The other strategic plan of this retail giant is to make sure that it has the up to date technological investments that are going to help it to have a competitive edge and to maximize profits as it reduces costs. This is because the supermarket has been spending more than half of its revenue on human labour because most of the operations in the supermarkets are done manually. This is in contrast with the competition that is almost 50 percent digital and thus incurs very insignificant costs on unnecessary human labour. One of the strategic investments that the supermarket will have in place by the end of the year 2010 is the docking systems that will ensure that the shelves are replenished electronically. This will be an advantage in that no other competitor in the UAE has that kind of technology and it will ensure that the shelves are replenished twice as fast as that of the competitors thus saving the customers form the inconveniences that are caused by shortages. The supermarket has also been undergoing losses due to shoplifting and employee pilferage meaning that is CCTV surveillance technology is not helping in cutting the costs incurred because of theft and pilferage of goods in the stores. This has prompted the management of the supermarkets to invest in the Radio Frequency Identification (RFID). This is a very effective method that will ensure that everything is tagged and connected to the electronically run RFID that will help to track the movement of anything in and out of the supermarket (Adam, 50). Apart from helping in reducing costs incurred through shoplifting and pilferage, the technology will be important in the reduction of inventory costs and ease the movement of goods from the suppliers to the supermarket because of its high profile tracking system. It also reduces the level of human involvement in the process of surveillance and inventory meaning that it will also help in cutting labour costs. In its expansion strategy, the human resource strategies that are geared to work with the strategic plans of the retail store are the internal promotions, and external recruitment all based on the competencies model (Thompson 45).
Task Two: Human Resource Plans
For the Choithram Supermarkets to remain competitive and ward off the stiff competition posed by the new entrants, it must be able to offer high quality services at all levels of operation (Mustafa, 50). This means that its entire human resource personnel must exhibit high levels of competency in everything that they do meaning that the human resource department must use the competencies model in their selection and recruitment of the new employees in line with their expansion strategies. Competencies are integral part of human resource management. The competency model works on the premises that the skills and the knowledge of the employee are the ones that determine performance and results. In its expansion strategy, I would recommend that Choithram use two methods of selection and recruitment. These are internal promotions and external recruitment all based on competencies (Freddy 6). This means that the supermarket should follow the trend set by walmat where those employees that have been competent and outstanding in performance are given middle level management roles (Marble 90). This method is very efficient especially in strategic human resource management because the competent employees who have been in the company for a number of years already understand the long term and the short-term strategic goals and are therefore best placed to carry out management roles (Raghav, 45). The external recruitment can be used to target outstanding professionals working outside Choithram so that they can be given specialized roles especially the ones that cannot be easily handled by the employees the retailer already has meaning that internal promotion cannot serve this purpose (Lewiston 4). If the supermarket wants to establish divisions like bakery, it should get a professional in homecare to spearhead the operations of the unit since internal promotion may not work especially because no one in the company already may have the skills to run it since it is a new area of operation. This has worked in the past for the company it is out to emulate, the Walmat, where a professional in the line of pharmacy was recruited to start the pharmacy division, and currently, that division is one of the fastest growing in the retail chain. The strategic HR plans in line with the objectives of the company can be easily executed using performance management where some of the jobs will be created based on the skills and the competencies of the employees (Vance & Scott 45). This is because; it is easier to fit a certain task to an employee that to fit skilled employees to a task that may not even require his or her knowledge and skill. Jobs that are designed through the competency model and recruitment made through the same model has always led to improved performance of the Wal-Mart stores (Gascoigne 45).
Task 3: Comparison
There is a slight difference in the basic HR functions in my plan and that of Choithram supermarket. This is because the supermarket has not been using the competencies model of selection and recruitment and their HR functions are based on academic merit without focusing on what the candidate can do with his grades. Competency models operate on performance based promotion and recruitment based on past performance but for the Choithram supermarket, this has not been given preference. This is why there is a high rate of turnover of employees who go outside especially to the competitors in the search for greener pastures because the HR functions of this retail giant do not have the capacity for the growth of employees career wise. Many have stagnated in the same positions for years despite having recorded good job performances (Mustafa, 50). They see greenhorns straight from the universities being given managerial positions because of the focus on academic merit and not experience or performance. This demotivates the long serving employees whop are forced to move to the competition thus compromising the competitive advantage of the supermarket. This means that the company needs to reevaluate its HR functions to ensure that the employees are motivated and rewarded accordingly in order to promote its competitiveness in the market.
Armstrong, M. A handbook of HRM Practice. London: Kogan Page, 2006.
Arthur, D, L. Strategic Personnel Management. Columbia: University Press, 2006.
Adam, M, The profile of the Choithram Trading Company, Khaleej Times, 2005.
Freddy, M. SHRM Practice. London: Macmillan, 2006.
Grace, L. Strategic Management. Ontario: Oxford University Press, 2008.
Mustafa, Z, The Choithram, Khaleej Times, 2007.
Marble, P.D. Strategic Planning. New York: Routledge, 2009
Haloed, M. T. Retail Management. London: Macmillan, 1998
Huang, C. Strategic Planning. New Jersey: Prentice hall, 2009
Lewiston, M. D. Retailing. New York: Macmillan, 1993
Martin, S.J.H. The Value of HR in Strategic Planning. New Jersey: Prentice hall, 2006
Mohammed, I, Dubai Marina vs. Choithram , Khaleej times,2009, retrieved, 9th Jan 2010
Neil, J. Principles of Strategic Planning. Stanford: Stanford University Press, 2006.
Peggen, K. HRM: Rhetoric and Realities. Stoke. Pal grave, 2004.
Ranade, S. The Wal-Mart Story. Hindu Business Line, 2005, retrieved on 2nd Jan 2010
Raghav, P, Retail Business in Dubai, Khaleej Times, 2009, Retrieved, 9th Jan 2010
Thompson, A. A., Strategic management concepts and cases. Chicago: Irwin, 2000
Ulrich, D. Adding Value, Delivering Results. Boston: Harvard Business School, 2007.
Wilkinson, A. HR Empowerment: Theory and Practice: New York: Guilford Press, 1998.