introduction to international business 4-20-07
TRANSCRIPT
-
8/8/2019 Introduction to International Business 4-20-07
1/14
Introduction to InternationalIntroduction to International
BusinessBusiness
April 20, 2007April 20, 2007
Brian Chen/Sanny LiaoBrian Chen/Sanny Liao
-
8/8/2019 Introduction to International Business 4-20-07
2/14
-
8/8/2019 Introduction to International Business 4-20-07
3/14
Firms may pursue different strategies inFirms may pursue different strategies in
managing international businessmanaging international business
KFC serves rice congee in ChinaKFC serves rice congee in China Localization strategyLocalization strategy
Microsoft develops most of its products in the U.S. and sellsMicrosoft develops most of its products in the U.S. and sellsthem worldwidethem worldwide
International strategyInternational strategy
McDonalds standardizes its production processMcDonalds standardizes its production process GGlobal standardization strategylobal standardization strategy
Catepillar designs its products to use many identicalCatepillar designs its products to use many identicalcomponents and invests in a few largecomponents and invests in a few large--scale componentscale componentmanufacturing facilities to cheaply supply thesemanufacturing facilities to cheaply supply these
components; at the same time, Catepillar set up smallercomponents; at the same time, Catepillar set up smallerplants in individual markets to augment the final product toplants in individual markets to augment the final product tosuit particular market demandssuit particular market demands Transnational strategyTransnational strategy
-
8/8/2019 Introduction to International Business 4-20-07
4/14
Staffing policiesStaffing policies
Def:Def: staffing policystaffing policy is concerned with theis concerned with theselection of employees for particular jobs.selection of employees for particular jobs.
Types of staffing policiesTypes of staffing policies
Ethnocentric staffingEthnocentric staffing
Polycentric staffingPolycentric staffing
Geocentric staffingGeocentric staffing
-
8/8/2019 Introduction to International Business 4-20-07
5/14
Ethnocentric staffingEthnocentric staffing
All key management positions are filled byAll key management positions are filled byparentparent--country nationalscountry nationals
Pros? Cons?Pros? Cons?
GoodGood BadBad
Provides quality managersProvides quality managerswhen talent is scarce in thewhen talent is scarce in thehost countryhost country
Maintains a unified corporateMaintains a unified corporatecultureculture
Ensures smoother transfer ofEnsures smoother transfer ofuncodifed knowledge (esp. coreuncodifed knowledge (esp. corecompetencies)competencies)
Limits the advancement ofLimits the advancement ofhost country nationalshost country nationals resentmentresentment
Can lead to cultural myopiaCan lead to cultural myopia
-
8/8/2019 Introduction to International Business 4-20-07
6/14
Polycentric staffingPolycentric staffing
Recruits hostRecruits host--country nationals to managecountry nationals to managesubsidiaries while parentsubsidiaries while parent--country nationalscountry nationalsoccupy key positions at corporate headquartersoccupy key positions at corporate headquarters
Pros? Cons?Pros? Cons?GoodGood BadBad
firm is less likely to sufferfirm is less likely to sufferfrom cultural myopiafrom cultural myopia
Less expensive to hire localsLess expensive to hire localsthan expatriatesthan expatriates
Glass ceiling for host countryGlass ceiling for host countrynationalsnationals resentmentresentment
Gap can form between hostGap can form between host--country managers and parentcountry managers and parent--country managers, the gapcountry managers, the gapmay be perpetuated by timemay be perpetuated by time
-
8/8/2019 Introduction to International Business 4-20-07
7/14
Geocentric staffingGeocentric staffing
Seeks the best people fro key jobs throughoutSeeks the best people fro key jobs throughoutthe organization, regardless of nationality.the organization, regardless of nationality.
Pros? Cons?Pros? Cons?
GoodGood BadBad
Enables the firm to make theEnables the firm to make thebest use of its human resourcesbest use of its human resources
Enables the firm to build aEnables the firm to build a
cadre of international executivescadre of international executiveswho feel at home working in awho feel at home working in anumber of culturesnumber of cultures can benefitcan benefitboth from local knowledge andboth from local knowledge andhardhard--toto--transfer firm coretransfer firm corecompetenciescompetencies
Governments may stipulateGovernments may stipulatethat the foreign subsidiariesthat the foreign subsidiariesonly hire local citizensonly hire local citizens
Can be very costly toCan be very costly toimplement (training andimplement (training andrelocation costs can be high)relocation costs can be high)
Placement of managers onPlacement of managers oninternational fast track mayinternational fast track maycreate resentmentcreate resentment
-
8/8/2019 Introduction to International Business 4-20-07
8/14
Expatriate managers sufferhigh attritionExpatriate managers sufferhigh attrition
ratesrates
Why?Why? US multinationalsUS multinationals
Inability of spouse to adjustInability of spouse to adjust
Managers inability to adjustManagers inability to adjust
Other family problemsOther family problems Managers personal or emotional maturityManagers personal or emotional maturity
Inability to cope with larger overseas responsibilitiesInability to cope with larger overseas responsibilities
Japanese multinationalsJapanese multinationals
Inability to cope with larger overseas responsibilitiesInability to cope with larger overseas responsibilities
Difficulties with new environmentDifficulties with new environment
Personal or emotional problemsPersonal or emotional problems Lack of technical competenceLack of technical competence
Inability of spouse to adjustInability of spouse to adjust
Can be alleviated by careful selection and extensive trainingCan be alleviated by careful selection and extensive training
-
8/8/2019 Introduction to International Business 4-20-07
9/14
What kind of training should expatriateWhat kind of training should expatriate
managers receive?managers receive?
Cultural trainingCultural training
Language trainingLanguage training
Practical trainingPractical training
Repatriate managers should also beRepatriate managers should also betrainedtrained
-
8/8/2019 Introduction to International Business 4-20-07
10/14
Performance AppraisalPerformance Appraisal
If you are on the board of a firm withIf you are on the board of a firm withforeign subsidiaries, what measures offoreign subsidiaries, what measures ofperformance would you use?performance would you use?
It is difficult to appraise the performanceIt is difficult to appraise the performanceof foreign managersof foreign managers HostHost--nation managers may be biased by theirnation managers may be biased by their
own cultural frame of referenceown cultural frame of reference
May be biased by distance and by their lack ofMay be biased by distance and by their lack ofexperience working abroadexperience working abroad need to rely onneed to rely onhard data alone, but that is often does nothard data alone, but that is often does notprovide a comprehensive pictureprovide a comprehensive picture
-
8/8/2019 Introduction to International Business 4-20-07
11/14
Ways to augment performance appraisalWays to augment performance appraisal
Put more weight on onPut more weight on on--site managers appraisalsite managers appraisalthan to an offthan to an off--site managers appraisalsite managers appraisal
Be cognizant of the nationality of the appraisingBe cognizant of the nationality of the appraising
managermanager Rely on former expatriates to help reduce biasRely on former expatriates to help reduce bias
HomeHome--office managers should be consultedoffice managers should be consultedbefore foreign onbefore foreign on--site managers complete formalsite managers complete formaltermination evaluationstermination evaluations limits the bias fromlimits the bias from
cultural misunderstanding.cultural misunderstanding.
-
8/8/2019 Introduction to International Business 4-20-07
12/14
National differences in compensationNational differences in compensation
There is a wide gap among executiveThere is a wide gap among executivecompensations across various countriescompensations across various countries
What is appropriate?What is appropriate?
Expatriate PayExpatriate Pay
= Base Salary= Base Salary
+ Foreign Service Premium+ Foreign Service Premium
+ Allowances (hardship, housing, cost of+ Allowances (hardship, housing, cost ofliving, education)living, education)
+ Differences in tax rates+ Differences in tax rates
+ Differences in benefits+ Differences in benefits
-
8/8/2019 Introduction to International Business 4-20-07
13/14
International labor relationsInternational labor relations
Firms need to be cognizant aboutFirms need to be cognizant aboutdifferences in labor rules across countriesdifferences in labor rules across countries
Examples:Examples:
Working hours/weekWorking hours/week
Style of managementStyle of management
Others?Others?
-
8/8/2019 Introduction to International Business 4-20-07
14/14
Global Human Resource ManagementGlobal Human Resource Management
ExerciseExercise
You are executive directors at WalYou are executive directors at Wal--Mart, CocaMart, Coca--Cola, and Wipro, and are planning yourCola, and Wipro, and are planning yourinternational expansion strategy into Russia,international expansion strategy into Russia,Brazil, and Southeast Asia. How will you staffBrazil, and Southeast Asia. How will you staffyour senior management positions?your senior management positions? What strategy do you plan to take?What strategy do you plan to take?
What staffing strategy approach would your take? What areWhat staffing strategy approach would your take? What arethe pros and cons of the strategy that you decide upon?the pros and cons of the strategy that you decide upon?
List the qualities that you seek in your ideal candidate. DraftList the qualities that you seek in your ideal candidate. Draft
his/her resumehis/her resume
How would you propose to evaluate his/her performance?How would you propose to evaluate his/her performance?
What compensation package would you propose?What compensation package would you propose?
Would you provide any special training for the new manager?Would you provide any special training for the new manager?