analysis of Salada Foods Jamaica Limited

Overview

The nature of the project requires that we conduct an analysis of Salada Foods Jamaica Limited, registered office is located in Kingston Jamaica and as such this project and its operations are within the home country of Jamaica.

The spill over effect of the global downturn has had a severe impact on the Jamaican economy especially due to structural deficiencies including: inefficiencies in the public sector, high energy costs, crime and politics. The Jamaican economic downturn has therefore been characterized by: weakened consumer demand, exchange rate devaluation (stabilized now), elevated inflation levels (moderating) and negative GDP growth. The Jamaican economy has continued its decline since 2007, with year-on-year real GDP dropping 0.9% for the quarter ended December 2010. A closer look at the economy, showed the manufacturing sector declined by 2.6% for the corresponding period. However, the subsector, Food, Beverages & Tobacco (which includes Salada) declined at a slower rate of 0.7% for the period. In nominal terms, this equates to a 1.6% decline in the subsector while the company was able to generate a 6.9% increase in revenues for the December quarter. Therefore, excluding Salada’s performance, the sector would have experienced a greater decline. Salada’s impressive growth (especially under the circumstances) suggests that either: 1) The company is a beneficiary of the economic downturn due to its lower priced products being substituted for premium lines or 2) The company’s increased promotional activities were successful in maintaining demand. At the end of this project a conclusion and recommend steps Salada Foods Jamaica should take based on this analysis, from an international management should be provided

Executive Summary

Salada Foods Jamaica according to (“Corporate Governance | Salada Foods Jamaica”, 2020) is regarded as one of the top consumer groups in Jamaica, with solid performance as a business and with a good reputation as a corporate citizen. Salada Foods Jamaica is a wholly owned Jamaican company and has been in the coffee processing business since 1958. They own the largest processing plant in Jamaica and the only soluble processing plant in the Caribbean. The company’s strongest export market is the U.S., thanks to significant support from chain stores like Publix and Wal-Mart and a good response from areas with dense Jamaican populations. It also exports to Canada (North America), the United Kingdom (Europe, the Caribbean and has gained traction within 17 provinces in China. The company has been listed on the Jamaica Stock Exchange (JSE) since 1969 and majority ownership of 74% is held by Donovan Lewis’ Ideal Group of Companies and Resource in Motion Ltd. The company’s main business lines are the processing of coffee, tea, a range of beverages, drink mixes and dessert products. They launched the Blue Mountain Peak coffee in 1958 and have since followed as a diversified firm with interests in food trading which includes beans, sauces juices and continues to evolve.

The management team includes the General Manager, Group Operations Manager, The Supply Chain Manager, The Commercial and Corporate Affairs  Manager , The  Group Engineer and service Manager and the Financial Controller. There 10 largest shareholder includes Resource in motions limited, AIC (Jamaica) Limited and IDEAL Limited company and Corporation.

In 2018 revenue grew by 7% to $1.13B, which is $72.16M above the $1.041B posted in 2017~2018. Exports improved by 10% above 2017, representing 14.5% of total revenue at year end 2018. Domestic sales grew by 7% year on year to $739.29 million aided by the performance of our Mountain Peak ginger teas and recently launched Mountain Bliss 876 brands. Export sales increased by 10 % above last year as marketing strategies to improve brand awareness in Diaspora communities in the United States paid dividends.

The driving force behind the company is the 20/20 Vision, a plan developed to transform the company into a global beverage leading industry in Jamaica, the Caribbean and other Diaspora Markets. The plan is well underway and the group is continuously re-balancing its portfolio of businesses to achieve high growth and enter markets and industries in which it sees opportunities. The company’s financial performance over the last five years has been good, and the company adheres to its dividend policy of paying at least the same amount in dividends in a current year than in the previous year.

Description of the Business

Salada Foods Limited launched the Jamaican blue mountain coffee in 1973 and in 2012 they introduced the Jamaica Blue Mountain Peak Instant ginger tea made from home grown Jamaican Ginger. In 2015 Pimora Pimento briquettes were introduced made from dried pimento leaves and added to their portfolio the flavour of jerk sauces ad seasoning. The briquettes will ultimately be produced at a new facility, and other products like cereal and honey are planned that Nelson-Brown hopes will resonate both domestically and internationally and allow users to combine flavours. In an effort to diversify their portfolio, in 2013 the company added Roberts brand of house hold products ranging from beans fruit juices, condiments and sauces. Their list of achievement included the safe quality foods certification level 2 in December 2017.

Mountain Peak Food Processors Limited continues to operate as the distribution arm of the Group and remains profitable. The firm is currently seeking a buyer for Salada’s shares in the Pimora subsidiary.

Business in Jamaica is done through a distributor, which then deals directly with domestically-based retail outlets. Salada Foods Jamaica Limited in its financial statement Year ending September 30, 2019 reflected a profit of $141, 367 with earnings per share of $1.37.

Environmental Analysis

External Analysis

It is important for organizations with the intent to operate on a global/ international scale, consider and asses the environment, i.e. the political, economic, social, technological or legal environment within countries they wish to operate or do business with, this is done through environmental scanning. Environmental scanning is the process of gathering information and forecasting relevant trends, competitive actions, and circumstances that will affect operations in areas of interest. (Deresky 2016).

External factors that have the potential to affect Salada’s business operations are classified as, political, legal, technological, economic and social risks.

Political Analysis

Let us begin by examining Political risks; a political risk as defined by Deresky is any governmental action or politically motivated event that could adversely affect the long-run profitability of a firm. In an article published in the Jamaica Gleaner, Ms. Dianna Blake-Bennett, General Manager of Salada Foods stated that due to the shortage in the market, Salada was unable to meet the 20 percent quota mandated by the Jamaican government for its operations. She also stated that while the company can import to supplement its needs, that process requires a permit and before that permit can be issued, the quota has to be met. Changes in the regulatory environment introduced by the Jamaican government as it relates to quotas and fees have adversely affected Salada’s operations and has the potential to occur in the future, should the government decide on introducing new fees and policies which may arise as a result of a change in government.

Economic Analysis

According to (Deresky 2016) a country’s economic risk is determined by its ability to meet its financial obligations. The economic factors that are of interest to organizations include economic growth, exchange rates, inflation rates, disposable income of consumers and unemployment rates, all of which could have a direct or indirect impact on the organization. The effects of the global recession had a severe impact on economies around the world, the Jamaican economy was also impacted due to structural deficiencies including, inefficiencies in the public sector, high energy costs, crime, and politics, which resulted in low consumer demand, devaluing of the dollar and elevated inflation rates. The global economy has also been under significant pressure over the past years, according to the International Monetary Fund, global output is expected to increase due to emerging markets (Insert the emerging markets). Salada would benefit from a slower growth rate in North America and Europe which are regions they export products to.

Although the manufacturing sector declined during the recession period, the subsector, Food, Beverages & Tobacco which Salada is a part of declined at a slower rate. During this period Salada was able to maintain its share in the market because of its pricing strategy.

Other environmental risks such as market risk, arises mainly from the changes in market prices, such as foreign exchange rates and interest rates, which affect the Company’s income or value of its holding of financial instruments. Interest rate risks are the risk that the value of a financial instrument will fluctuate due to changes in market rates. The Company can manage this risk by investing in monetary instruments contracted at fixed interest rates for the duration of their terms.

Legal Analysis

Salada operates in several countries overseas and therefore, they must be cognizant of the laws that govern the host and home countries. According to Deresky, the legal environment consists of local laws and legal systems of countries in which an international company operates in an international law that governs relationships between independent countries. In order to prevent the negative effects of legal implications, the organization must be prudent to ensure that they are complying with the laws of the host and home country. If this is not done the organization runs the risk of not having adequate legal resources outside of local interpretation and enforcement. (Deresky 2016).

Salada does business with China for example, whose practices are far different from the home country and have been called into question by other countries who have had the experience of doing business with them, the unfortunate experience of many foreign managers in China is that financial legal systems remain limited in spite of attempts to show the world a capitalist face. The difference in cultural practices, employment laws, registration, and licensing requirements and other factors could pose a risk to the organization if they aren’t dealt with strategic intent.

Technological Analysis

           The effects of technology in any business are universal, the technology around the world is ever-changing and if organizations are not able to adapt and possess the technical resources to take advantage of these changes, they run the risk of losing the potential to be top performers in their market/industry. Salada should, therefore, be committed to continually updating their manufacturing processes with new technology to improve the process while maintaining the supply of quality products to its consumers.

Competitor Analysis

Salada’s Competitors on the premium coffee market, their main rivals are

• Mavis Bank Coffee Factory
• Wallenford Coffee Company

According to Deresky Competitive analysis/research is a field of strategic research that specializes in the collection and review of information about rival firms. Jamaica’s coffee industry is separated into two major categories, Premium coffee and Non-Premium coffee which is mainly instant coffee. Salada is a participant in both categories, their strength, however, is in the production of instant coffee.

In terms of market share, Salada is estimated to account for over 62% of the local coffee market, fending off competitors which include:

• Nestlés’ Nescafe
• Jablum
• Grace Kennedy
• Country Traders

Figure 1

According to research conducted by the Jamaica Stock Exchange (JSE), as the leader in the market, Salada enjoys economies of scale and benefits greatly from the positive brand image of “Mountain Peak”. Further research by the JSE states that Salada has significant pricing power over its competitors.

Salada dominates the instant coffee market and is second in the roasted and ground beans as illustrated in figure 2.

Figure 2

In order to assess Salada’s competition, Porter’s Five Forces model was applied.

Salada’s SWOT Analysis

In recent years, Salada has improved its internal infrastructure and broadened the distribution of its products particularly in the overseas markets. Recently, Salada commenced distribution in China, while maintaining exports to other markets within the Caribbean, North America and Europe. The outlook on the instant coffee business remains fairly strong both locally and internationally. It is expected that Salada will continue to grow in this regard since premium brands are likely to continue facing downward pressure due to the sensitivity to consumer spending both locally and internationally.

Risk Assessment and Management

Salada recognizes that an important aspect of creating and sustaining shareholder value requires a measured approach and acceptance of risks. Salada has established risk management policies to identify and analyze the risks faced to set appropriate limits and controls to monitor and ensure adherence. This includes systems and policies to ensure effective monitoring of their daily operations and adherence to quality management programs.

Salada’s strategic risks are two-fold, from a regulatory standpoint, changes relating to the importation of agricultural products, including green coffee beans used in manufacturing their instant coffee. Salada has taken a proactive approach to diversify its product offerings to include non-coffee based products.

Secondly, the macroeconomic environment, although relatively stable, still possesses characteristics that make it susceptible to volatility. Salada seeks to continuously improve its operations and processes, to ensure that its products are manufactured competitively to manage these risks.

Ethics and Social Responsibility

In our society today ethics and social responsibility are two important aspect of any business both locally and internationally. It is important for managers to be educated /knowledgeable about the issues of ethics and social responsibility because of demands from the public and other interest groups.

Ethics can be define as “the study of what is good and evil, right and wrong, and just and unjust” (Steiner, Steiner, 2005). Social responsibility is the commitment of organizations management towards the well-being and interest of society in which it is located (Business Dictionary, n.d).

Social Responsibilities/Issues

There are a lot of social responsibility issues in both Jamaica (homecountry) and the wider world in which Salada foods operates. These include ethical business conduct, working conditions, human rights, the environment and community outreach development.

In an article publish in the Jamaican Gleaner which speaks to companies doing more in ensuring ethical business conduct (Wehby, 2011). Highlights the importance of company’s carrying out its activities base on integrity and trust. Jamaica is plagued by crime and violence and businesses need to be the exemplary figure which helps to eliminate this from the society.

In any workplace it is vital to ensure that employees are safe and comfortable. Salada ensures that within its work environment they are able to easily identify hazards and reduce the possibilities of health and safety issues. This helps to give employees the feeling that they are getting the best possible employment conditions.

Salada foods responsibility is to respect human rights and to maintain standards recognize throughout the world. In countries such as China where there are issues with child labor it is critical to observe these rights.

Observing the rules of the environment and putting measures in place to reduce the impact on its surroundings is a social responsibility that the business has to maintain. These include disposing of waste properly, improve energy efficiency and ensure employees are trained to fulfil its requirements.

Community outreach and development is crucial in creating a better future for other generations to come. In an effort to fulfilling this obligation Salada foods adapted the Jebb Memorial Basic School where it performs improvement on the schoo structure, financial and medical support to students and teachers as well as sponsorship of events that assists in the schools development. The community is also a major interest group that will benefit from this initiative.

Ethical, Legal and Political Issues in Host Country

China is one of the host countries that Salada foods is located in, when compared to other counties in the world China is not free from ethical issues. Ethical issues include corruption, recently on BBC News there was a feature which stated that “One million Chinese officials punished for corruption” (BBC.com 2016). These legal implications would suggest that these corrupt individuals would be fined or even removed from public office.

Also the US as its fair share of corruption and bribery issues and in order to protect them against these issues the Foreign corrupt practices Act of 1977 was formed. This act eliminates US companies from participating in unauthorized payments and donation to foreign governments (Deresky, 2014). Currently Salada does not face any legal and political issues in these countries. However in China and America there are quotas extended to the Jamican firm Salada on the number of items they are able to export to them. Saladas products in these countries are also subjected to tarrifs and taxes.

Managing subsidiary-host country interdependence

Managing interdependence is important in achieving growth and stability of the company.  Managing interdependence means that international managers must look pass general issues of social responsibility and deal distinct concerns of the MNC subsidiary-host country relationship ( |Deresky, 2014). In any situation the host country as specific needs such as, increasing employment rates, increase economic growth and productivity.

Salada helps to meet these needs by making jobs available for local workers in the host country.  Also it helps to increase economic growth by investing well needed foreign investment in these countries. In addition to the above the company helps to increase productivity by setting up factories in these regions to help increase their productivity has a country.

Culture Identification and Comparison

Geert Hofstede postulated that there are four value dimensions of cultural differences that affect work attitudes and organizational behaviour. His postulation is based on his research on over 116,000 people in 50 countries. Therefore, his value dimensions are being applied to compare fundamental differences between Jamaica the home country of Salada and China being the host country. His proposed four value dimensions are power distance, uncertainty avoidance, individualism, and masculinity.

Power distance

According to Hofstede insight Power Distance is defined as the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally. These members of society respect hierarchy structures and authority in organization and are reluctant to express disagreement with their managers (Deresky, 2014). Within the structure of Shanghai UBT Intl Trade Co. Ltd there is a centralized structure and autocratic leadership which stems from high power distance as employees acknowledge the boss’s authority simply by respecting that individual’s formal position in the hierarchy, and they do not bypass the chain of command. Operation in Jamaica scores low on this dimensions (score of 45) because Jamaicans like to be independent. Even though there is high regard for hierarchy and persons in authority it is convenience only.

Within Salada Jamaica ltd. Employees and manages exercise equal rights, coaching leaders, power is decentralized, and employees are encouraged to politely express any disagreements because it results in more harmony, open communication of ideas, and cooperation.

Uncertainty avoidance

Uncertainty avoidance is the extent to which members of a culture feel threatened by ambiguous or unknown situations (Deresky, 2014). Countries with a high level of uncertainty avoidance tend to have strict laws and procedures to which their people adhere closely (Deresky, 2014). The Chinese are comfortable with ambiguity; as evident in their way of communicating the Chinese language is full of ambiguous meanings. The Chinese score 30 on this dimension because they are more adaptable and entrepreneurial. Meanwhile Jamaica score 13%. This shows that Jamaicans has a far more relax attitude in which practice counts more than principles and deviance from the norm is more easily tolerated. What makes a great difference with operation in China and Jamaica is that in Jamaica Schedules are more flexible, hard work is undertaken only when necessary, precision and punctuality do not come naturally,

Individualism

According to (Deresky, 2014) individualism, refers to the tendency of people

to look after themselves and their immediate families with less emphasis on the needs of society. Individualistic cultures generally emphasize self-respect, autonomy, and independence. Collectivism is at the extreme end of individualism. Collectivism predominant elsewhere there is more emphasis on group achievements and harmony. Hiring and promotion practices in collectivist societies are based on paternalism rather than achievement or personal capabilities (Deresky, 2014). In Collectivism societies there are tight social frameworks, emotional dependence on belonging to the organization, and a strong belief in group decisions (Deresky, 2014).The fundamental issue addressed by this dimension is the degree of interdependence a society maintains among its members. It has to do with whether people´s self-image is defined in terms of “I” or “We”.

China and Jamaica are both classified as a collectivistic society with China and Jamaica scoring 20 and 39 respectively. Employees of both countries act in the interests of the group and not necessarily of themselves or the organization and this type of behaviour also affect promoting and hiring. As they act in the interest of their group the best person for a position may not be hired because promotions tend to be within a group. Persons are committed to their group and not the organization; hence, the right decisions are not always made as it relates to the organization

Masculinity

Masculinity refers to the degree of traditionally masculine value assertiveness, materialism, and a lack of concern for others that prevail in a society (Deresky, 2014). Femininity being on the opposite side values concern for others, for relationships, and for the quality of life. The fundamental issue with this dimension is what motivates people, wanting to be the best (Masculine) or liking what you do (Feminine). According to Hofstede value dimension in highly masculine societies women are generally expected to stay home and raise a family and that in these societies’ organizations finds considerable job stress, and organizational interests generally encroach on employees’ private lives. In the 21th century this is no longer the case in Salada because women are now holding high positions worldwide in distributing partnering companies.

China and Jamaica scoring 66 and 68 respectively indicates that the operations within these boarders are driven by competition, achievement and success, with success being defined by the winner or best in field. In Jamaica employees live in order to work”, managers are expected to be decisive and assertive, the emphasis is on equity and competition and performance and conflicts are resolved by fighting them out ( Hofstede Insight China, n.d.). While in China, Chinese workers will sacrifice family and leisure priorities to work. Persons will leave their families behind in faraway places in order to obtain better work and pay in the cities.

Communication Styles

The term communication describes the process of sharing meaning by transmitting messages through media such as words, behaviour, or material artefacts (Deresky, 2014). Communication in organizations varies according to where and how it originates the channels, and the speed at which it flows, whether it is formal or informal, and so forth. According to (Deresky, 2014) the type of organizational structure, the staffing policies, and the leadership style will affect the nature of an organization’s information system or countries culture. As an international manager, it is useful to know where and how information originates and the speed at which it flows, both internally and externally.

Cultural variables in information systems and context underlie the many differences in communication style between Chinese and Jamaicans. The Chinese style of communication refers to the preference for humanity, reciprocity, a receiver orientation, and an underlying distrust of words and analytic logic (Commis ceo Global Consulting Ltd. (2020).The Chinese believe that true intentions are not readily revealed in words or contracts but are, in fact, masked by them. In contrast to Jamaicans verbal agility and explicitness (Deresky, 2014)

Communication styles, refers to the unique ways in which individuals interact and exchange information with others (Deresky, 2014). There are four basic communication styles: passive, aggressive, passive-aggressive and assertive. The Chinese are classified as more passive communicators because they usually fail to express their feelings or needs, allowing others to express themselves. They lack outward communication which can lead to misunderstanding, anger build-up or resentment. At the same time, they can be safer to speak with when a conflict arises, because they most likely will avoid a confrontation or defer to others (LaMarco, 2018). They often display a lack of eye contact, poor body posture and an inability to say “no.” On the other hand, Jamaicans adopt a more assertive communication style. They express their own needs, desires, ideas and feelings, while also considering the needs of others. Jamaicans also when communicating with international leaders try to maintain a “win win” situation, balancing one’s rights with the rights of others. The distinction between both countries can also be made with high and low context culture. Where Chinese feelings and thought are not explicitly expressed, they talk less and made assumption about what the message means through their own knowledge of the person or surrounding. Jamaicans who are classified as low context culture are very talkative, too obvious, and redundant (Deresky, 2014)

Comparison of Communication styles between Jamaica and China

Indirect verbal and nonverbal VS more direct verbal and nonverbal

Chinese choose the indirect path to negotiations, if you’re too direct with Chinese businessmen, you will likely cause them to shut down and withdraw from negotiations altogether. The Chinese prefer to be polite and courteous, showing deference to their business contacts and respecting them.  If you show them this respect and politeness, they will match it and you will find it easier to negotiate your way to a middle ground where everyone is satisfied. On the other hand, Jamaicans are direct and will politely tell you what they think, even if they disagree with what you have said and expect others to be equally direct.

Relationship communication VS More task communication

Relationships are viewed as more important than rules for both Chinese and Jamaicans. Similarly, they view networking and relationship building to be crucial to long-term business success. In China relationships and networking are highly valued and the Chinese will spend a great amount of time building relationship before start discussing business. Also, no topic is off limit when building business relationship with Chinese. This is because if they do not value you as a friend to keep, they will not want to be business partner with you. While Jamaicans are outwardly warm and friendly, they often appear standoffish at the initial introduction because they are reserved until they get to know someone and expect some small talk before business is discussed. Unlike the Chinese who will indulged in personal topics.

Negotiations and Decision- making

Negotiation can be defined as an activity in which two or more parties aim to reach a mutual agreement (Deresky, 2014).  There are various ways of negotiation and decision making that happens between Jamaica and its Hosts Countries such as:

Confrontational Strategies

Chinese at all cost will avoid confrontational strategies while having a confrontation is not preferred by Jamaicans, they will not shy away from it. They prefer to directly and politely state their affirmation and then tries to move pass it with the aim of strengthening their relationships.

Prefers more to-the-point communication

Chinese non-verbal communication speaks volumes. Since the Chinese strive for harmony and are group dependent, they rely on facial expression, tone of voice and posture to convey meaning or intention. Chinese communicate in a way that you need to read between the lines to get to know what exactly they imply. On the other hand, Jamaicans are more to the point when communicating. They firmly and politely state exactly what they want you to hear.

Long Term Vs Short Term Negotiation

In China, business decisions aren’t made quickly. The Chinese tend to take their time discussing a business and deliberating on its pros and cons. They will also consult with many others that are higher than them on the hierarchy before they arrive at a decision. Putting them under pressure to make their decisions quicker will only lead to them shutting down and politely resisting you. Jamaican do take time to make their decisions and will often consult with persons that are higher up on the hierarchy, but they do so at a much faster pace than Chinese. Time is money for Jamaicans and so the faster they can close the deal the better it is for them.

Negotiating Communication

Even though the Chinese choose the indirect path to their negotiations, they also tend to ask highly personal questions of their business contacts, which might seem in contradiction to their polite nature at first. However, it isn’t. It’s just another illustration of how the Chinese value personal relationships far more than impersonal business relationships. The Chinese will ask you highly personal questions and invite you to their family or social setting; this is because the Chinese let their professional and personal lives overlap. This is a central aspect of their business customs. They want to consider you a friend and not just a business associate. Chinese need to build their trust in you, or they won’t be able to do business with you. In contrary Jamaicans in do not practice missing business with personal life. They will have small talks on social events to reduce any tension or identify common like or dislike, but they will not indulge in private life topics.

Home Country

Jamaican Negotiators

According to (Hofstede, 1997) and (Deresky, 2014) a successful Jamaican negotiator acts as follows:

• Undemanding
• Loyal to family or members of their group
• More relaxed
• Love to take risk
• Argumentative when right or wrong
• Older individuals like to take time out before starting negotiation about business
• Younger individuals don’t take time out before starting negotiations

Host Country Comparison – China

Chinese Negotiators

According to (Graham and Lam, 2003), a successful Chinese negotiator acts as follows:

• Does not forget favours
• Very suspicious
• Vey formal in their negotiation process
• Very friendly
• Threatens to do business with competitors
• Collectivist
• Pad Prices

Entry Strategy

Salada is considered to be an international company and international companies are considered importers and exporters, they have no investment outside of their home country.(Deresky 2011).

Salada tea is produced under license by the Harris Tea Company. The strength of Harris Tea comes from our extensive knowledge and skill with over 200 years combined tea procuring and blending experience. Harris Tea Company operates four state-of-the-art tea blending and packing plants located in Georgia, New Jersey, California, and the United Kingdom. Salada operates under Licensing from Harris Tea Company which gives it access to the markets that it operates this was part of Salada’s entry strategy into other markets.

Licensing is a relatively sophisticated arrangement where a firm transfers the rights to the use of a product or service to another firm. It is a particularly useful strategy if the purchaser of the license has a relatively large market share in the market you want to enter. Licenses can be for marketing or production.

Salada entry strategy into the other markets that it operates in is that of an International strategy where all its decisions are made in the home country of Jamaica. It exports its products to several countries to include the United States, Canada, Barbados, United Kingdom, China, and the Caribbean and Latin American countries.

As part of its business strategy, there is no difference in its business strategy in the domestic market and the other markets that it exports its products. It simply applies this strategy to all markets such as in the united states whereit partners with chain stores like Publix and Wal-Mart. This is a part of the international strategy where it uses host countries distributors or host country middlemen to distribute its products in that country without adopting the product to that country or to suit that market.

“Salada’s freshly released annual report (2019) also indicated that the company is seeking out distribution channels in a bid to “further aid the growth of our market share all around.”

In selecting it entry strategy companies should use The CAGE Distance Framework which identifies Cultural, Administrative, Geographic and Economic differences or distances between countries that companies should address when crafting international strategies.

Salada utilizes international entry strategy because of its core operating principle in the domestic market that it operates in and because of the authentic nature of its product it can easily export its product to markets that want some of the unique offerings in the domestic market and they won’t have to worry about the added cost of catering and modifying the product to suit different markets and by partnering with host country distributors it greatly helps to distribute products across a section of the host country that would not be easily accessible to those markets without heavily investing in those host countries.

Small firms seldom go beyond this stage, and large firms use this avenue for many of their products. Because of their comparative lack of capital resources and marketing clout, exporting is the primary entry strategy used by small businesses to compete on an international level.

Home and Host Country Structure

Many smaller firms start their international involvement by exporting. As such, they may reorganize into a simple domestic structure plus export department. They can take a step further by reorganizing into a domestic structure plus a foreign subsidiary in one or more countries. This structure works well for companies with one or a few subsidiaries located relatively close to headquarters.

With further expansion, a firm may create an international division organized along functional, product, or geographic lines. In this case, foreign subsidiaries are organized under the international division, and subsidiary managers’ report to its head. In turn, the head reports to the CEO of the corporation. This structure allows managers to coordinate resources for foreign activities under one roof and thus, facilitates the beginning of a global strategy.

Organization Structure

Salada employs a domestic structure plus foreign Subsidiary this is how they organize their domestic and international operations, because domestically they main operations is in manufacturing which is distributed locally and they then export to regional and international markets. In review of (Salada financial statement 2019) which highlight their mode of operation to be manufacturing and exporting. In Salada’s case they only have executive assistant and export coordinator which is basically an export department their they are really a domestic structure with and export department.

Salada would fall under the global functional structure and is based around the organizational functions having a General Manager, Group Operations Manager, Commercial & Corporate Affairs Manager, Financial Controller and Quality Assurance Manager. Their export and import activities are integrated into the activities of each function. This structure is primarily used by small firms with highly centralized systems and is appropriate for product lines using similar technology and for businesses with a narrow spectrum of customers. The result is plants that are highly integrated across products and that serve single or similar markets (Deresky 2011).

Local and International Staffing approach

Choosing the type of staffing strategy can have significant implication on the decision making authority and methods of communication and the perpetuation of human resource practices

The staffing strategy employed by Salada is that of polycentric approach where its staff are sourced domestically the evaluation and controls are also done locally are used to fill all positions. The company board of directors, management team and staff is also made up of home country national.

International appointments are normally done using International human resource management (IHRM) functions and begins with the recruitment and selection process to include recruiting and selecting employees, providing preparation and training, setting up appropriate compensation and performance management programs for expatriates, an expatriate is an individual living in a country other than his or her country of citizenship, often temporarily and for work reasons. An expatriate can also be an individual who has relinquished citizenship in their home country to become a citizen of another country.

In terms of staffing of international appointment Salada currently does have international staff mainly because they are in the importing and exporting business. They currently import a small percentage of their raw material and source the rest domestically and export the finished good that is distributed by host countries distributors hence eliminating the need to set of offices and employs persons in the host countries. Currently Salada exports to the United States through two importers one on the east coast and one on the west coast. These companies are the main importers cleared goods are delivered to the main distributers such as Publix and Wal-Mart

.

Training Techniques and Compensation Methods

The company does not have to focus on employment of international employees or compensation and thus eliminate the need to make provisions for them as host country employees and managers cost more than domestic managers and employees and the need for training techniques in the different areas would not apply such as Area studies are documentary programs about the country’s geography, economics, socio-political history, etc. Cultural assimilators expose trainees to the kinds of situation they are likely to encounter that are critical to successful interactions. Language training, sensitivity training, and field experiences are also training options (Deresky 2011.)

Motivation/Leadership Styles

Salada Foods Jamaica is a company that has an excellent reputation due to the high-quality products it offers to customers and consumers locally and in other countries, including North America, the Caribbean, Europe and China (ConnectAmericas. 2020). The company specializes in the production and exportation of beverages, dessert products, drink mixes. The decision by the company to invest in China is a result of the need to diversify itself and to reach a broader market. The paper will compare and contrast the meaning of work, the motivation of employees to work in both countries as well as the leadership styles in Jamaica and China.

How employees define the meaning of work has similarities and differences in Jamaica and China., Jamaica is a country that has limited opportunities and therefore works is extremely important to people. People can hold more than one job to be in a position to better their lives and those of their families. Jamaican employees value their jobs and work hard and diligently to remain in employment and are ready to take up any opportunity to improve their incomes (Evans & Lindsay, 2016). On the other hand, the meaning of work is determined by the rules and regulations applied in a company as well as the law in china. Most often, employees in china work under the 996 working hour system. This system encourages overtime work, where employees work approximately 12 hours a day, six days a week. The intention is to increase productivity by increasing speed and reducing costs. The social-economic and cultural backgrounds determine how people define work and what it means to them.

Employees are motivated to work in both countries by good wages, job security, and empowerment, opportunities for development and involvement, proper working conditions, exciting work, among other factors (Deresky, 2010). All employees are motivated when they are paid well, appreciated and recognized when they perform their roles well. Further, employees are most certainly likely to be motivated when they are given roles that fall under their interest and passion. Further, employees desire the right working conditions such as having functional space, cleanliness and availability of tools and relevant equipment. Employees are also likely to put all their efforts into their work when they know they have job security. Employees who have good supervisors and managers are expected to perform better because they are nurtured and helped to grow and expand to ensure they reach their potential. In Jamaica, employees today prefer to have a work-life balance to ensure they have time to take care of their families. It is essential to understand the Chinese business etiquette as well as ethics to motivate employees in china. Job promotion is an essential factor in motivating Chinese employees because they must be regarded highly by their friends and families. Chinese employees desire that they are corrected quietly rather than in a staff meeting. Further, they are motivated by employers who develop loyalty.

The leadership styles appropriate for employees in china is paternalistic/authoritative leadership. It is a leadership style that emphasizes discipline, authority and moral integrity implemented in a personalistic environment (Evans & Lindsay, 2016). Authoritarian, benevolent and moral leaders, therefore, lead employees in china. On the other hand, employees in Jamaica desire leaders who treat them with dignity and respect. People like straightforward methods. Communication should be clear and concise. Women play a massive role in the management of companies and are likely to be in high and respected positions. Women tend to be strong negotiators and, therefore, expected to be a massive part of Salada’s leadership and management team.

References

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