Managing International Human Resource

Managing International Human ResourceCase 4.1: Comex Group: A Mexican Firm Goes International (Mexico)There are many reasons for “going international”—and many paths for getting there. The reasons may be proactive or reactive. Proactive reasons for internationalization include a search for new markets and resources, increased cost pressures, and incentives provided by governments and trade agreements. Reactive reasons include following existing customers into foreign markets and being closer to suppliers and customers. Comex, a Mexican paint manufacturer, provides an example of one firm’s reaction to the global economy in an industry and from a country which have not, historically, operated across borders. Comex was started in 1954 by Jose Achar, descendant of Syrian immigrants to Mexico, as Comercial Mexicana de Pinturas, in a garage in Mexico City using an old World War I mill to mix water-based and oil paints. When the company moved to new facilities in 1958, it began to manufacture vinyl paint, which turned out to be so successful that competitors banded together and convinced hardware retailers to stop selling Comex paint. That emergency forced the Achar brothers to establish their own paint stores, selling their own paint exclusively. This approach—franchising—was a first in Mexico. Within a year, Comex had established 100 stores.Because the Achars decided to manage their stores as concessions, turning store managers into business owners, they created a new career path for Mexicans who otherwise had limited opportunities to advance economically. Under this scheme, Comex was able to grow quickly while circumventing the need for enormous amounts of fresh capital to finance a chain of retail stores. Despite the strains associated with such growth, the firm is still family-owned and managed. “There are many family members at the company, but we have three main principles which have made family ownership successful at Comex. We maintain openness to our brothers, respect for our elders, and right-of-way to the most capable,” says Marcos Achar Levy, nephew of the founder, who began his career at the firm in 1988 and became CEO in 2004.Though Comex started as a small family hardware and paint business in Mexico City, it has more than 3,300 retail stores throughout North and Central America and is now Mexico’s number 1 paint retailer and number 4 throughout the US, Canada, and Central America. Comex is now the twelfth largest paint retailer in the world and has the goal to become number 7 within five years. To maintain a major growth rate, the company realized early on that it would have to expand internationally. And it recognized that the most effective way for it to gain access to new markets would be through acquisition. So, over the last few years, Comex has purchased such major brands (and their stores) as Frasee, Parker, Kwal, Color Wheel, Professional, and Central Paints in the US, Canada, and Central America, making the Comex Group a multi-billion-dollar (US) multinational business. Comex started this process in 2004 with a surprise acquisition of Professional Paints, based in Lone Tree, Colorado, which was one of the first cross-border acquisitions involving a Mexican company acquiring a US company. The marriage was expected to substantially enhance each firm’s product lines, enabling each to expand its special products and approaches into the other’s markets, illustrating the benefits of going international through acquisition—and some of the challenges of merging firms from two very different countries and cultures—a formula that has now been successfully repeated in a number of additional major acquisitions. As their website says, “Today, Grupo Comex brings color without borders for creativity without bounds.”1. What HRM issues have to be considered when making a cross-border acquisition?2. Which are likely to be the most difficult to deal with?3. What should a company do to minimize the HRM issues in a cross-border acquisition?4. What HR issues arise with the use of a franchising model for growth?