QIG, a family corporation, has got shining achievement. It is contribute to two aspects. In the one hand, it is a family corporation, because its ownership character, the strategic management target would concentrate on the cost minimized, but pursue profit maximized. This strategy spirit would be throughout its management layer, this would be a reason of that the most managerial positions and important posts are charged by its family members. On the other hand, it has faced an excellent opportunity accompanied with China reform and opening up policy process. It is of course not only contributed to above reasons, but also certainly related to its corporation strategies on both internal and external environment.
Surfing in The Economic Wave ── PESTLE & 7S Analysis
QIG mainly involves in metal smelting industry, it has three smelteries, aluminum ingot plant, magnesium metal plant and ferro silicon plant. First it should be stated, QIG sits in Ningxia province, the north and west China, where the economy is undeveloped compare with the south and east China. The abundance electric resource1*, low labour cost and low cost praedial resource are the fundamental advantage for its entering industrial field.
In external environment, QIG develops its business accompanied with China reform and opening up process. It essential benefit from reform and opening up policy, such as the first 3 years tax break policy which would greatly attract to any investors, particularly high fixed cost investment sector. In 1997, QIG invested 0.23 billion RMB launched its first aluminum ingot line (QIG ERP Database 1997). In 2000, QIG added its second aluminum ingot line by injected 0.14 billion RMB. In 2001, by its mature experience of investment in industry, QIG targeted to invest in an annual capacity 6000 tone magnesium metal plant. A huge investment was carried out by QIG in a short time, there is another reason based on government policy which is deflection west economy policy.
Depending on opening up and reform policy worked out by Chinese government and his own suitable policy, QIG insists on high developing speed to challenge himself, which help him finished the primitive capital accumulation. There are common words stated as “any theory can’t stand without practice and any practice would be conducted by theory”. QIG is able to succeed in its investment and to achieve operational strategies; HR and people with their knowledge would be an important infrastructure. One of the state owned aluminum plant, Qingtongxia Aluminum Plant which is the shareholder of the world second biggest aluminum corporation, Canada aluminum corporation, locate at 60 Kilometers away from QIG. It is meant that QIG had already got technical support advantage. QIG hunted many managers and technicians from Qingtongxia Aluminum Corporation, it is not only ensure QIG to achieve its operational strategies, but also recruit qualified and high skilled staffs. At another point, Ningxia province is an undeveloped region. It has abundance labour, special majority of workers come from rural area, which dramatically reduce the HR cost. Consequentially, it is a great advantage for QIG with a physical intensive HR structure.
Where QIG gets money form? It would be a question. However, China has the fastest economic growth speed in the world and has been looked as the world workshop. Because there is a big ‘cake’, according to World Bank reported China absorbed 68 billions FDI by 2003 (World Bank 2003). QIG made advances cooperated with Glencore which is a famous Switzerland resource company. From this action, it is possible to observe that QIG has a tendency to drive a family corporation extending to external market. Furthermore, due to government issued the deflection west economy policy, QIG has acquired very big fund support from Chinese banks. It just like a Chinese Proverb described: “time advantage, geographical advantage and support of people are as the three success factors”. QIG has all packed.
Qinyi Industrial Group Corporate Strategy
According to Gerry and Kevan, "Corporate-level strategy is concerned with the overall purpose and scope of an organization and how value will be added to the different parts (business units) of the organization."(Gerry Johnson & Kevan Scholes 2002:11).
In order to understand QIG’s corporate strategy, an effective approach should be considered with its corporation spirit, which described as “Adopting new technologies, improving administration, speeding up capital velocity and enhancing group’s image”(QIG www). Therefore, QIG as an industrial manufacturer, its core target is to produce satisfied products through gradually prefect management and improved technology to generate low cost and high profitable competitive advantage. On the other hand, QIG pursues high developing and distending speed. As a industrial corporation, the size is key factor for its surviving. Because industry is a high fixed cost unit, distending the scale of a corporation can result in adding the unit profit and decreasing the average unit cost. At operational strategy level, QIG paid some attentions on “the dam effect and barrel effect” which focus on corresponding with every steps of its corporation strategy approach.
As China emerges with great potential, it is impossible for QIG to ignore such a big opportunity. QIG adapts its corporation strategies to benefit from the great opportunity. As another Chinese Proverb described: “ be careful what you wish for, you just might get it.” In 2002, it has made a next five-year plan. The most important target is to extend its aluminum ingot line up to 280,000-tone, entering the top 10 aluminum plants queue in China. The total annual sale will reach 3 billion RMB, and the average annual revenue will reach 0.52 billion RMB. Whilst a 4*15Mkw accessorial electric power station has been designed in its ERP database (The ERP Database of QIG: 2002). By implementing of the next strategic approach, QIG could enhance its competitive advantage in a more dynamic economic environment.
Qinyi Industrial Group HRS with Its HRM Activities
QIG always believe that “People are the only element with the inherent power to generate value. All the other variables offer nothing but inert potential. By their nature, they add nothing, and they cannot add anything until some human being leverages that potential by putting it into play.” (Jan Fitz-enz). Following above notion, QIG looks at its HRM as an important part of its corporate strategies. Obviously, QIG knows that employees are the core of the corporation, and its fortune comes from assembling different talent together through corresponding with doing different parts to generate value and achieve shareholder’s expectation. Furthermore, the framework of the corporate HRS would present QIG’s HRM conception: “loyalists as superior, Capables as a core, Workers as a base, Intellectuals as an auxiliary” (QIG www).
According to QIG’s corporate strategies, it has adopted many feasible HRM activities. First, as physical Intensive Corporation, QIG needs a great deal of employees. And metallurgy industry is a specific field in need of majority of specialized employees in different posts. 1) QIG employs some authoritative officials deal with executive positions, which builds a very close relationship for QIG to communicate with government. 2) QIG employs a member of line managers or engineers from state owned corporations to consolidate its operational strategy, whilst, to concentrate on training some well-performed staffs in order to shift the line managers who is at old age. 3) Some particular posts which can not recruit enough employees, QIG pays employees to train or go to future education. 4) QIG has invested in their family members for the consolidation of family’s dominant position of management. Its three family members have been sent to three foreign countries for further education. 5) QIG built an electronic registration system which is used to monitor staffs’ day-to-day performance of attendance. 6) The new employees usually have 3 months training term.
Best Practice, Best Fit and Comparison
After clarifying QIG’s corporate strategy and HRS considering with its HRM activities, it might be know that QIG has represented its Best Practice and Best Fit in the different parts of strategy level. First, the understanding of “Best Practice” and “Best Fit” is necessary, the Best Practice as Mick Marchington & Adrian Wilkinson defined “Best Practice” might be considered as “the idea that a particular bundle of HR practices has the potential to contribute to improved attitude and behaviours, lowerlevels of absenteeism and labour turnover, and high levels of productivity, quality andservice, ultimately generating higher organizational performance and profitability”(2002:177). Comparing with the Best Fit model which defined “ 'Best-fit' models are based on the proposition that different types of HRS are suitable for different types of business conditions. The best-fit approach claims that there is a link between HRS and competitive advantage. Organizations need to identify the HR strategies, which 'fit' their enterprises in terms of their product markets, labour markets, size, structure, strategies and other factors. What is 'right' for organization is not appropriate for others.” (Stephen Pillbeam & Marjorie Corbridge 2002:58).
As a result, it is easy to link ‘Best Practice and Best Fit’ to QIG’s HRS. For instance, the allowance is judged by staffs’ attendance which get from the electronic registration system, this approach not only offer a fair judgment on staff’s remuneration, but can also assess staff’s work performance. There is another circumstance, QIG makes the different offer for distinction of the staffs’ position, this approach would satisfy the staff’s needs of status, as a result, the staff’s enterprise would be stimulated. In a private corporation, the staff’s position might be distinguished more clearly according to their contribution, also recruitment and sack is more flexible. Because private corporations are considered less about social obligation than state corporations are. Consequently, a conclusion would be drawn that QIG attempt to adopt the proper application of ‘Best Practice’ and ‘Best Fit’ into its HRS, ensure that QIG obtains a sustainable nature resource and HR.
Conclusion and Suggestions
Based on discussion above, it might be known QIG struggles its HRM to impact the most processes on HRS. QIG, a complete family owned corporation, has reach at an adoring achievement. It is a miraculous achievement that assembled 1500 people’s knowledge and competence to carry out the expectations for a single stakeholder. According to QIG’s corporate strategies and its corporation structure, it is possible to make an improvement on its HRS.
First, in its corporate-level strategy, it is necessary to absorb a number of experts to involve in its board. In common, in family corporations, the significant decisions are probably made by family members. As a reason, it would leads to wrong strategy. It just likes Johnson Gerry & Kevan Scholes declared: “People are at the heart of strategy. The knowledge and experience of people can be the key factors enabling the success of strategic. But people are at the heart of strategy. They can also hinder the successful adoption of new strategies too”(2002:477).
Second, in its business unit strategy, it is considered with that QIG is an industrial manufacture, but it also presents both buyer and supply status in market. QIG not only need the high skill workers, qualified line managers, but the experienced marketing consultants or analysts are also needed. Because by the next strategy carry out, its capacity will be dramatically increased, the recourse as well. Nowadays, the information resources of demand and supply chain play a very important role. If QIG could invest in improving its IS, it would squeeze the supply chain and help it predict market efficiently, because QIG produces industrial resource which the price very relies on international market. But this suggestion would be a challenge for its HR.
Finally, in its operational strategy, although QIG performs many ‘Best Practice’ and ‘Best Fit’ in its HRM, it would be some limitations on its HR approaches. First and foremost, it should be emphasized that QIG is a family corporation. The HRS would perform less on ‘soft’ side, which is also often underplayed by other organizations. As a reason, it seems necessary for QIG to pay extra attentions on concerning with staffs’ or collective behavior, ensuring to have an appropriate relationship with employees.
Notes:
1* there are two state power stations in Ningxia province, Qingtongxia hydroelectric power station and Qingtongxia carbon electric power station.
Bibliography
* Bratton, J. & Gold, J (2003) Human Resource Management – Theory and Practice, New York: Palgrave Macmillan.
* Gerry, J. & Scholes, K. (2002) Exploring Corporate Strategy, London: Prentice Hall.
* Lynch, R. (2003) Corporate Strategy, London: Prentice Hall.
* Marchington, M. & Wilkinson, A. (2002) Personnel Management, England: Blackwell.
* Pillbeam, S. & Corbridge, M. (2002) People Resourcing - HRM in Practice (2nd edition), England: Pearson Education Limited.
Reference
* Fiscal report of Qinyi Industrial Group: 2002
* http://www.qinyi-group.com.cn
* Newspaper: LegalDaily 15.12.2002, http://www.legaldaily.com.cn
* Qinyi Industrial Group Introduction
* The ERP report of Qinyi Group: 2002
* The report of China Top 500 private corporations: 2001
* World Bank Report - China 2003
