AXA is a French multinational insurance company that its business spread over different countries around the world. The company offers insurance service, investment management and other financial service. The company has its headquarters in Paris. It was founded in year 1816 but got its present name AXA in year 1999 when it was acquired by Royal Guardian Exchange. In India, the company has its joint venture with Bharti Group making it Bharti AXA life insurance company (AXA.com, 2016).
The host country is selected as India. India is the world’s second most populous country in world making it an attractive market for AXA insurance company. The year 1991 economic reform paved the way to the entrance of the global private companies in India. The country is observing huge economic development and has become a front leader in the economic growth rate even when the present day world is observing heat of global meltdown. The Indian culture of saving money for education of children, marriage of daughter and various other reasons has brought in new set of opportunities for AXA life insurance company. Therefore the company has observed a huge market for its products and service in India.
The key micro and macro environmental factors and issues impacting the selected country India include the followings.
- Rivalry among businesses:
India characterizes the presence various global multinational and national insurance companies. This has created a rivalry among the insurance business. Various local and global brands in insurance market includes New York Life insurance, Edelweiss Insurance, IFFCO Tokyo Insurance, LIC of India, Aviva etc. These insurance companies pose huge threat to the business of the company with their aggressive marketing techniques and deployment of efficient sales agent.
- Strong hold monopoly:
India observes the strong hold of national insurance company LIC or Life Insurance Corporation of India. People in the country are really skeptic to invest in other company than LIC. The addition to their trust came in when the year 2008 market fall led to the decline in returns and even reaching up to bankruptcy by all the insurance companies than LIC. This way the trust and returns to the investment made by the customers brought in LIC will a monopoly creation in the field of insurance market.
- New entrants:
The threat of new entrants is always there in the Indian market. Due to open door policy and reforms, the entrance of new companies has become easier. In the past few years the establishment of DLF Pramerica Life insurance and IFFCO Tokyo made their entrance in the insurance market.
- Corrupted political order:
The corruputed political order offers a support to the new companies to develop their business in the country with display of full irresponsibility. That is the money of the people invested in insurance products are often posed to high threat of stock markets which has led to huge loss. However the political will and corruption did not took the matter seriously and led to the loss of billions by the life product holders. This has led to the decline in interest of the people in investing in insurance companies and especially any other company except LIC.
- Lower legal applications:
India has applied all sorts of legal applications to safeguard its people especially investors from the fraudulent activities or loss making business offers of the new companies. However the lower legal applications are the characterisitcs of the present day country. This led to the rise in complications and problems for the investment made by common people. For instance, Aviva life insurance applied so many huge risks in the insurance products that led to the loss of billions as investment made by the people after year 2008 market fall. However no credible support was offered to the public followed by lower legal applications to safeguard their interest.
- Technological backwardness:
The technological backwardness of the country in terms of slower net connections and lesser access to computer system has resulted in decreasing awareness among the people. Although the new India is characterized by highly educated and well aware youth but they are hardly concerned about assessing the information about companies, their products, benefits and credibility. Due to this reason the veteran are taking all investment decisions depending on their past experiences.
There are number of cross cultural and HRM issues that rise between the home and the host countries of business operation. These includes the followings.
- Fear of unknown:
People of India has fear of unknown which is widespread prevalent. Due to this reason, people take precautionary steps before depending or trusting the international business. The employment in the government jobs and local companies are given higher prority than in international companies. The insurance products of local companies especially the government backed companies are preferred before other companies.
- Difference in cultural environment:
There is a huge difference in cultural environment between India and France. In India people concentrates their life and earnings on their children. Therefore invest for the future of their children. Maximum of the Indian save money for male children with the motive to help establish new business to him and for female children with the motive of her marriage. Hence a lot of interference in the future of children in India is observed made by their parents. However this is not in the case of French people. The French people save money with the motive to support their old age. Also they work for themselves and do not interfere in the future of the children. The similar trend is observed in offices where the AXA agents from India pose their concentration on selling child benefit plans than old age pensions.
- Misperceptions and misbeliefs leading to conflicts:
A number of misperceptions and misbelief exist between French and Indian employees. The French employees consider the least intereference by the managers of head executives as ideal for letting them concentrate on work. However the Indian employees consider the important for the managers and other high level officials to interefere and apply controls at regular itnervals in the business process. Also the target of job among French employees is to accomplish higher authority, while for the Indian employees the better job means better pay. These misperceptions and misbeliefs actually leads to conflict like situation.
1. Workforce planning and development:
Workforce planning and development is an important HRM issue identified by AXA in India. Since India has a huge work force with great skills and educational background, the efforts are put in a lot for identifying the best and most appropriate employee. This way pressure over the AXA delegates are posed by the politicians and other influential people to select a definite person for job. Also the development programs including training, education and others are found difficult to be applied on the Indian employees as they do not consider this vital. Also the language different affects the communication and thereby persuasion between the two country people.
2. Managing globalization:
For AXA, it is really difficult globalization especially in India. Indian public is often characterized by carelessness and immature behavior. Therefore the management of the people becomes difficult when the Indian employees try to conflict with each other for no or little cause which are otherwise overseen by French employees as not so important. Also the habit of reporting and following directives is not observed well in Indian employees which really affects the effective process of managing globalization especially in India.
3. Performance appraisal:
The performance appraisal factors identified by French officials are considered unimportant by the Indian counter parts. Therefore they create the performance appraisal of their own and keep it before the high level management for approval.
4. Employee retention:
The Indian employees are hard to be retained in one company. This is because of the fact that the emergence of global companies in the country has offered huge prospects of career growth and earning possibilities for the human resource. This way the Indian employees can easily be head hunted by offering even a little rise in pay scale. However the French employees prefer to obtain better job authority, career prospects and promotions from their jobs.
A number of recommendations can be offered to AXA insurance company.
- The insurance products should be devised as per the needs of locals.
- The business should offer consistent returns and stability in growth to achieve customer satisfaction and references.
- The human resource in India should be dealt in the way they consider best.
The proposal for appropriate solution therefore would include deployment Indian human resource managers in HR department so that they could deal accordingly with their Indian counterpart. This way the contingency to manage and contain the issue can be achieved.