HRM Assignment Example - Case Study on La Gusto Coffee

This is a human resource management case study sample on La Gusto Coffee, an Italian coffee bar chain that plans to open its first Chinese stores in Shanghai and Beijing. The company is fictional: it is the case in the assignment brief, and every figure attached to it, including the roughly 30 Italian stores, comes from the brief rather than from a company report. The industry figures used to test the brief's assumptions are real and sourced. It was written for a university HRM module against a four-part brief, and it uses Perlmutter's staffing typology, the comparative HRM literature on China, and the International Labour Organization's definition of decent work.

If your brief looks like this one, our MBA assignment help covers HRM case studies, staffing models and cross-cultural reports, and more MBA assignment samples are listed by topic.

Why Is Expanding from Italy to China an HRM Problem?

Because almost every cost of the move is a people cost. The property and the supply chain can be contracted. A manager recruited locally, baristas trained in a second language, expatriates relocated and supported, and the legal exposure of employing them are what the company is actually buying, and none of it transfers from Italy.

The brief describes a chain of about 30 stores in Italy that has already opened in the UK, Spain and France. Those three moves were inside one continent, one broad legal tradition and a set of languages its managers could hire against. China is a different working language, a separate legal system, a six- or seven-hour time difference from head office and a labor market the company has no contacts in.

It is also not an empty market, which is the first assumption a market-entry brief should test rather than assert. Starbucks ended its 2025 financial year with 8,011 stores in China, up 5% from 7,596 a year earlier, on China revenue of $831.6 million in the fourth quarter alone (Starbucks Q4 and full fiscal year 2025 results). A chain of 30 Italian stores is entering a market where one competitor operates more than 260 times its store count. That does not make the entry unwise, but it does mean the entry has to be built on something the incumbents are not doing, and for a service business that something is the staff.

The brief asks four questions, and the sections below take them in order: the HRM challenges of the move, the staffing strategy, the difficulties the expatriates will face, and the ethical issues of operating in China.

What Are the Key HRM Challenges of Opening in China?

The challenges fall under cultural distance, legal and regulatory requirements, language and recruitment. Work and authority are organized differently, and labor, land and contract law form a system of their own. Mandarin is the working language for customers and staff. A general manager, supervisors, store managers and baristas must be found in a labor market the company does not know.

HRM challenges of opening in Shanghai and Beijing

1. Cultural distance

   • Relationships and authority work differently at work
   • A family audience rather than a single commuter
   • A six- or seven-hour time difference from head office

2. Legal and regulatory

   • Labor, land and contract law form a system of their own
   • Approvals precede hiring, not the reverse

3. Language

   • Mandarin is the working language
   • Expatriate adjustment tracks language ability
   • Translation needed for contracts and training

4. Recruitment

   • A general manager who knows the local market
   • Supervisors, store managers and baristas
   • High turnover in food service

Effect Opening La Gusto Coffee stores in China

1. Cultural distance. The gap is not a matter of taste in coffee. Easterby-Smith, Malina and Yuan (1995) compared HRM practice in Chinese and UK companies directly and found the differences concentrated in how relationships, hierarchy and the employment bargain itself are understood, rather than in the technical content of the HR function. Two consequences follow for La Gusto Coffee. A store designed around a single commuter buying an espresso standing up has to work for a family group, because the occasion is different. And head office cannot supervise from Italy across a six- or seven-hour difference, so authority has to be delegated to somebody in the country from the first day. The company should build its own picture of the Chinese market rather than reason from its European experience, and budget that research as a cost rather than absorb it as a task.
2. Legal and regulatory requirements. Labor law, land use and contract law in China form a system of their own, and Cooke (2008) sets out how far the institutional setting shapes what HRM can and cannot do there. Practically this reorders the project plan: approvals, the entity, the lease and the employment contracts come before recruitment for the stores, not alongside it, because an offer that cannot be lawfully honored costs the company its first hires and its reputation with the next ones. The legal work is the critical path for the opening date.
3. Language. Mandarin is the working language for customers, for suppliers and for the staff being trained. Selmer (2006) studied Western expatriates in China specifically and found their adjustment bound up with language ability, which turns a translation budget into a retention measure rather than a convenience. La Gusto Coffee needs interpretation for contracts and for training material from the beginning, and language training for anybody it sends for more than a few weeks.
4. Recruitment. Qiu Zhang and Wu (2004) examined the HR problems facing hotel and travel businesses in China and identified recruitment and retention as the industry's structural constraint rather than a seasonal one, which is the closest published parallel to a coffee chain's staffing profile. The company needs a general manager, supervisors, store managers and baristas. The general manager is the appointment everything else rests on, because that person supplies the market knowledge, the supplier relationships and the ability to read a candidate's experience against local norms.

Key Cultural Differences

Culture is the part of the difference the company can manage. Vaiman and Brewster (2015) argue that institutions explain much of the variation in HRM between countries, and that management has more influence over the effect of cultural differences than over institutional ones. So the legal work above sets the timetable, and the four differences below are where the company has room to choose.

1. Communication. Mandarin is not an obstacle only at the counter. It sets who can be promoted, whose training material has to be translated, and how a complaint reaches head office. Chapel (2002) treats management communication in China as a skill to be taught rather than a language to be acquired, which is the more useful framing for a company that will always have some non-Mandarin speakers in senior roles. The practical implication is that the store-level supervisory layer has to be local and has to be trusted with judgment, because it is the only layer that can operate entirely in the working language.
2. Business etiquette. Pauluzzo (2010) studied Italian companies operating in China, which makes it the closest literature to this brief. The recurring finding is that Italian firms underestimate the time it takes to build a working relationship with suppliers and officials, and then read the delay as inefficiency. For La Gusto Coffee that means the supplier negotiation schedule should be written long, and the person doing it should be the local general manager rather than a visitor from Italy.
3. Work culture. Cooke (2009) reviews a decade of change in Chinese HRM and describes a system moving quickly rather than a fixed one, which is a warning against fixing a policy on the basis of a single year's observation. What matters operationally is holidays, shift patterns and the expectations attached to a promotion, and all three are set locally. The Chinese operation should therefore write its own staff handbook against Italian standards rather than translate the Italian one.
4. Individualism and collectivism. European workplaces more often reward the individual contribution; Chinese workplaces more often reward the group's. Warner (2010) argues that Confucian-influenced practice persists underneath formally Western HR systems in Greater China, which is why an imported appraisal scheme that ranks colleagues against each other tends to be quietly ignored. The adaptation that fits is a team bonus at store level, with individual recognition kept for progression rather than for pay.

Which Staffing Strategy Should the Company Use?

A geocentric one, with one condition. Perlmutter (1969) named three options: ethnocentric staffing, filling senior posts from the parent country; polycentric, filling them locally; and geocentric, filling them with the best person available anywhere in the group. The report recommends geocentric for the management layer, and insists the general manager in China is recruited locally.

The argument for geocentric here is not diversity for its own sake. It is that the two things this opening needs most, an internalized service standard and local market knowledge, are held by different people, and an ethnocentric or a polycentric policy gets only one of them. Welch (1994) set out how staffing policy has to follow the firm's international strategy rather than its convenience, and Jiang and Yahiaoui (2019) trace the same decision in French multinationals operating in China, where the integration approach chosen at head office determined how much local adaptation the HR function was allowed.

Ethnocentric staffing would put Italians in charge of the Shanghai and Beijing stores. It protects the product and the service standard, and it fails on everything that requires reading the local market: site selection, supplier negotiation, recruitment and the handling of officials. Polycentric staffing would hire the whole management layer in China. It solves those and risks the standard, because there is no one in the operation who has run a La Gusto store and knows what the company means by one.

The geocentric version puts a locally recruited general manager in charge, supported by one or two experienced operators seconded from Italy for the first year with an explicit brief to transfer the standard and then leave. Store managers and supervisors are recruited locally. Baristas are recruited locally and trained by the secondees. The mixed team also handles a mixed customer base, which in a tourist city is a commercial advantage rather than a policy position.

The cost has to be stated, because a recommendation that hides it is not an argument. Secondment is the most expensive way to fill a post: relocation, housing, schooling, a higher base and the tax work that goes with it. The answer is to price the secondment as a time-limited training cost with a defined end date and a named successor, rather than as a permanent management structure. The general manager's local salary is the permanent cost, and it buys the knowledge the company cannot relocate.

Selection has to be structured to match. Interviews for the store-management roles should test the same things in Shanghai as in Milan, with the language requirement stated for each post rather than applied informally, because an undefined language requirement is where a hiring process quietly turns ethnocentric.

What Difficulties Do Expatriates Face in China?

Language comes first, because an expatriate's adjustment in China is tied to it. Then come cultural distance in how relationships and authority work, the permits and paperwork of relocation, health and safety, and work-life balance when long hours leave no time to build a network. Each has a support measure the company can budget for, not a policy statement.

1. Language, and the adjustment that follows it. Selmer (2006) found expatriate adjustment in China tied to language ability, which makes language training the first item in a support package rather than a benefit. The measure: paid lessons during working hours before departure and for the first year, plus interpretation for anything contractual or disciplinary. The test of whether it worked is not a certificate, it is whether the secondee can run a shift briefing without an interpreter by the end of the year.
2. Cultural distance in relationships and authority. Reiche, Lee and Quintanilla (2018) set out how comparative HRM differences show up in day-to-day management rather than in written policy, which is why cross-cultural briefing works better when it is about specific situations than when it is about national character. The measure: a briefing built around the actual decisions the secondee will make in the first month, and a named local counterpart who can be asked without it being an escalation.
3. Administrative and regulatory procedure. Permits, registration, housing paperwork and banking take time that cannot be compressed, and a manager doing them alone loses weeks of the job they were sent for. Warner (2010) describes the institutional environment this sits inside. The measure: the company retains a local adviser to handle the process, and treats the fee as part of the cost of the posting rather than an overhead.
4. Health and safety. Chan and Mak (2012) link HR practice to occupational safety and health outcomes directly, which puts safety inside the HR brief rather than beside it. For a food service operation the exposures are burns, slips and long standing hours, and for a relocated employee they are compounded by not knowing where to go when something happens. The measure: private medical cover with named clinics, a written first-aid and incident procedure in both languages, and the safety briefing given in the language the person being briefed works in.
5. Work-life balance and isolation. Au and Ahmed (2014) study work-life balance in a Chinese cultural setting and treat it as a retention question rather than a welfare one. A relocated manager in a new city with long hours and no network is the profile most likely to leave inside a year. The measure: a capped roster written into the secondment agreement, funded travel home at a stated frequency, and help with housing chosen for the commute rather than for the price.

What these five have in common is that each is a line in a budget. The secondment package should be costed before the offer is made, because a support commitment that was never funded is discovered by the employee at the point they need it.

What Ethical Issues Does a European Company Face in China?

For a coffee chain hiring in Shanghai and Beijing, the issues are the position of internal migrant workers in the urban labor force, decent work as the International Labour Organization defines it, and reward. All three are within the company's control, so each is a management decision rather than background.

Migrant Workers

China's urban service economy is staffed in large part by internal migrants, and a coffee chain hiring baristas in Shanghai and Beijing will be hiring from that group. Hesketh, Jun, Lu and Mei (2008) studied the health status and health care access of migrant workers in China and found access restricted relative to registered urban residents, which is a documented consequence of the household registration system rather than a matter of individual employers' generosity.

For La Gusto Coffee the practical questions are narrow and answerable. Does the employment contract cover the same terms regardless of household registration. Does the company's medical cover extend to staff whose registration is elsewhere. Are the hours actually worked the hours recorded. A company that can answer those three in writing has addressed the issue; one that describes its values has not.

Decent Work (ILO)

The International Labour Organization defines decent work as "opportunities for work that is productive and delivers a fair income; security in the workplace and social protection for all; better prospects for personal development and social integration; freedom for people to express their concerns, organize and participate in the decisions that affect their lives; and equality of opportunity and treatment for all women and men" (ILO, decent work).

That definition is more useful to a report than a general commitment to ethics, because it is a list a manager can be audited against. Applied to this opening it gives five checks: pay against the local living cost rather than the local minimum, a written contract and enrollment in social insurance, a training path that leads somewhere, a route for raising a complaint that does not run through the person complained about, and recruitment criteria that do not screen on registration status or gender. The company should adopt those five as standing conditions for the Chinese operation and report against them to head office.

Reward

Reward is where the ethical and the commercial arguments meet. Food service turnover is high everywhere, and every departure costs recruitment, training and a period of worse service. A reward structure that pays at the bottom of the market and offers no progression produces exactly the turnover it is trying to economize on.

The recommended structure has three parts. A base rate set against the local market for skilled service work rather than against the legal minimum. A store-level performance element, because the output being measured is a shift's work rather than an individual's, which also fits the collectivist pattern described above. And a stated progression route from barista to supervisor to store manager, with the training attached to each step, so that the internal candidate is the cheap candidate. None of this is generosity. It is the cheaper of two ways to staff a store.

What Does the Case Study Conclude?

That the HRM decisions set the schedule and the cost of this entry, and that three of them cannot be deferred: the locally recruited general manager, the legal and contractual work that has to precede hiring, and the funded support package for the seconded staff. The market is crowded, so the service standard is the entry argument.

Taking the four parts of the brief in turn. On challenges, the binding constraint is not culture in the abstract but the sequence: legal approvals gate hiring, hiring gates training, and training gates the opening date. On staffing, a geocentric policy is right for the management layer because the service standard and the local knowledge sit with different people, and the condition attached to it is that the general manager is recruited in China. On expatriates, five difficulties each have a costed support measure, and the package is priced before the offer rather than promised and improvised. On ethics, the ILO's definition of decent work gives five auditable conditions, and the position of internal migrant workers in the urban labor force makes them a live question for a company hiring baristas in Shanghai and Beijing rather than a compliance formality.

The limit of this analysis should be stated. La Gusto Coffee is a case in a brief, not a company with published accounts, so the report can test the brief's assumptions against real market data but cannot test its financial ones at all. A live version of this work would start with the store economics, because a staffing model that the gross margin cannot carry is not a staffing model.

What Does the Report Recommend?

Hire the general manager in China first. Finish the legal and contractual work and cost the secondment package before anyone else is offered a post. The other three are standing policies: a staff handbook written locally, reward set against the skilled local market with a published promotion route, and a language requirement stated for every post.

The order the China opening has to follow

1. 1 Appoint the general manager in China The market knowledge, supplier relationships and reading of candidates that every later step depends on.
2. 2 Complete the legal and contractual work The entity, the lease, the permits and the employment contract templates.
3. 3 Cost the secondment package, then offer it Relocation, housing, language training, medical cover, travel home and the local adviser's fee.
4. 4 Recruit store managers, supervisors and baristas locally Against a language requirement stated for each post.
5. 5 Train the baristas One or two operators seconded from Italy transfer the service standard.
6. 6 Open, then hand over The secondees leave at the end of the first year, each to a named successor.

1. Recruit the general manager in China before anything else. Every later decision, from site selection to supplier terms to whether a candidate's experience is any good, depends on someone who can read the local market. Appointing this role last is the most common way a market entry of this kind loses its first year.
2. Finish the legal and contractual work before the first offer to store staff. The entity, the lease, the permits and the employment contract templates are the critical path.
3. Cost the secondment package before the offer, not after. Relocation, housing, language training, medical cover, funded travel home and the local adviser's fee are the package. Each has a number.
4. Write the Chinese staff handbook locally against Italian standards. Holidays, shift patterns, breaks, escalation and promotion criteria are set by local law and local expectation. Translating the Italian handbook produces a document that is wrong in the places that matter and right in the places nobody reads.
5. Set reward against the skilled local market and publish the progression route. Pay above the legal floor, a store-level bonus and a written route to store manager cost less than replacing the baristas the company has trained.
6. State a language requirement for every post. Which roles need Mandarin, which need English, and which need both, written into the job description before the post is advertised.

Related samples and pages:

• Global marketing strategy of an SME, the marketing side of the same market-entry decision.
• Cultural differences in business, for the cross-cultural theory this case study applies.
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• Toyota's global strategy and competitive advantage, if your brief is about international strategy rather than people.
• PESTEL analysis of Netflix, for a company case study built on a different framework.
• All MBA assignment samples and business assignment samples.

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Sources

• Au, W.C. and Ahmed, P.K. (2014) 'Sustainable people management through work-life balance: a study of the Malaysian Chinese context', Asia-Pacific Journal of Business Administration, 6(3), pp. 262-280. Cited for work-life balance as a retention question in a Chinese cultural setting.
• Chan, S.C. and Mak, W.M. (2012) 'High-performance human resource practices and organizational performance: the mediating role of occupational safety and health', Journal of Chinese Human Resources Management, 3(2), pp. 136-150. Cited for the link between HR practice and safety outcomes.
• Chapel, W.B. (2002) 'Effective management communication for China', in International Management in China. London: Routledge, pp. 169-182. Cited for management communication as a taught skill.
• Cooke, F.L. (2008) 'HRM in China', in The Routledge Companion to Strategic Human Resource Management. London: Routledge, pp. 458-472. Available at: taylorfrancis.com. Cited for the institutional setting HRM operates inside in China.
• Cooke, F.L. (2009) 'A decade of transformation of HRM in China: a review of literature and suggestions for future studies', Asia Pacific Journal of Human Resources, 47(1), pp. 6-40. Cited for Chinese HRM as a system in rapid change.
• Easterby-Smith, M., Malina, D. and Yuan, L. (1995) 'How culture-sensitive is HRM? A comparative analysis of practice in Chinese and UK companies', International Journal of Human Resource Management, 6(1), pp. 31-59. Available at: tandfonline.com. Cited for where Chinese and UK HRM practice actually differs.
• Hesketh, T., Jun, Y.X., Lu, L. and Mei, W.H. (2008) 'Health status and access to health care of migrant workers in China', Public Health Reports, 123(2), pp. 189-197. Cited for restricted health care access among internal migrant workers.
• International Labour Organization (n.d.) Decent work. Available at: ilo.org/topics/decent-work. Source of the definition quoted in full above.
• Jiang, C. and Yahiaoui, D. (2019) 'French multinational companies' HRM in China: strategic orientation and integration approaches', Asia Pacific Business Review, 25(1), pp. 3-18. Cited for how head-office integration choices shape local HR adaptation in China.
• Pauluzzo, R. (2010) 'How cultural determinants may affect HRM: the case of Italian companies in China', Research and Practice in Human Resource Management, 18(1), pp. 78-95. Cited for Italian firms' experience of relationship building in China.
• Perlmutter, H.V. (1969) 'The tortuous evolution of the multinational corporation', Columbia Journal of World Business, 4(1), pp. 9-18. Reprinted in International Business (Routledge, 2017). Available at: doi.org/10.4324/9781315199689-7. Source of the ethnocentric, polycentric and geocentric typology.
• Qiu Zhang, H. and Wu, E. (2004) 'Human resources issues facing the hotel and travel industry in China', International Journal of Contemporary Hospitality Management, 16(7), pp. 424-428. Cited for recruitment and retention as a structural constraint in Chinese hospitality.
• Reiche, B.S., Lee, Y.T. and Quintanilla, J. (2018) 'Cultural perspectives on comparative HRM', in Handbook of Research on Comparative Human Resource Management. Cheltenham: Edward Elgar Publishing, pp. 48-64. Available at: elgaronline.com. Cited for comparative HRM differences appearing in daily management rather than written policy.
• Selmer, J. (2006) 'Language ability and adjustment: Western expatriates in China', Thunderbird International Business Review, 48(3), pp. 347-368. Cited for the link between language ability and expatriate adjustment.
• Starbucks Corporation (2025) Starbucks reports Q4 and full fiscal year 2025 results, 29 October. Available at: investor.starbucks.com. Source for 8,011 China stores at 28 September 2025, up 5% from 7,596, and China Q4 net revenues of $831.6 million.
• Vaiman, V. and Brewster, C. (2015) 'How far do cultural differences explain the differences between nations? Implications for HRM', The International Journal of Human Resource Management, 26(2), pp. 151-164. Available at: doi.org/10.1080/09585192.2014.937969. Cited for institutions explaining more of the difference in HRM between countries than national culture.
• Warner, M. (2010) 'In search of Confucian HRM: theory and practice in Greater China and beyond', The International Journal of Human Resource Management, 21(12), pp. 2053-2078. Cited for Confucian-influenced practice persisting under Western HR systems.
• Welch, D. (1994) 'HRM implications of globalization', Journal of General Management, 19(4), pp. 52-68. Available at: journals.sagepub.com. Cited for staffing policy following international strategy.