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International Business : The Challenge of Global Competition, 8/e
Donald Ball
Wendell H. McCulloch, California State University Long Beach
Paul L. Frantz, California State University Long Beach
Michael Geringer, California Polytechnic State University
Michael S. Minor, University of Texas Pan American
Human Resource Management

E Learning Session

  1. Regional or cultural differences in labor conditions PowerPoint (32.0K)
    1. Japan's "Job-for-a-life" culture disappearing
      • Pink slip in Japan-A psychological abyss
        1. In a culture accustomed to lifetime employment, layoff is devastating
        2. Middle aged Japanese are hurt the most
      • From lifetime to part-time
        1. Since 1998 more than 3 million jobs have been lost
        2. Outsourcing many functions of firm
    2. Japanese birthrate drop may create jobs-and problems
      • The growing elderly population and decreasing birthrate are creating a crisis
      • Future pension obligations are in doubt
    3. The huge German-Polish wage gap
      • Creates cross border illegal movement by Poles to work at wage rates less than paid to German workers
      • Wages for Poles higher than could be achieved in Poland
      • Wage gaps in Europe should close under EU plan for free movement of workers
    4. 250 million tiny hands
      • International Labor Organization estimates that 250 million children between ages of 4 and 15 work
      • Child labor, children under 16 working in production and having little or no formal education, is common in developing countries
        1. Realties differ from politicians' proclamations
          1. Children removed from factory work are often relegated to street life
          2. World Bank and UNICEF are moving toward recognition that in some countries child labor represents an economic advantage for children that wouldn't be there otherwise
    5. Children and chickens
      • Developing country labor force can be taught skills quickly
      • Psychological coping with factory life is more difficult to acquire
      • Time and work ethic are two areas of greatest problems in crossing some culture boundaries in developing countries
  2. Staffing: The good news and the difficulties
    1. Use of domestic employees overseas is on the rise as of 2000
    2. Sources of managers Concept Check
      • Home country
        1. Most ICs use citizens from their own countries
        2. Called Home country nationals
        3. Host country national unavailable
          1. Foreign subsidiary often cannot find managers in host country
          2. Parent company will send managers to help
          3. Teams may be sent to subsidiary
        4. Training for headquarters
          1. Broaden experience of managers on rise in firm
          2. Firms earning large parts of revenue from international usually require overseas assignment for top managers
        5. Headquarters representative
          1. Firms using mostly host country nationals may use a few home country nationals to provide organizational knowledge and influence culture development
          2. May use technicians when new technology in subsidiary is involved
      • Host country
        1. Host country nationals are usually well versed in their country's customs and environment
        2. Host country managers can make a foreign company seem les threatening in countries with high nationalism
        3. Some governments demand use of host country nationals as a part of agreement to allow the IC to enter
        4. Disadvantage for host country managers is unfamiliarity with company culture and policies
        5. Rising problem is piracy of personnel once trained by IC
        6. Possible conflict of loyalty
      • Third country
        1. Sometimes disadvantages of home or host country managers can be mitigated by mangers from third countries
        2. Can be close culturally and already familiar with firm's policies and culture
        3. Sometimes costs are less for third country manager than for home country manager
    3. Selection and training
      • Home country
        1. Few college graduates are hired to send directly overseas
        2. Firms prefer to have them spend several years in home country to learn policies and culture
        3. Families of managers going overseas has been a problem
      • Host country
        1. Same criteria applying to home country apply to host country employees
        2. Training will likely differ
        3. Host country nationals hired in the home country
          1. Some ICs try to hire host country nationals upon graduation from home country business schools
          2. New hires are sent to headquarters for indoctrination into firm's policies and culture before host country assignment
        4. Host country nationals hired in the host country
          1. Host country hires' training might include in-house training courses
          2. Host country may be brought to home country for indoctrination
      • Third country
        1. Third country hires may accept lower wage than home country employees
        2. May come from a similar culture
        3. May have worked for another unit of the IC
        4. Particularly relevant to developing countries because of the shortage of trained host country prospects
        5. Host country attitudes
          1. If governments require their own nations in management positions, third country personnel will be no more welcome than home country
        6. Generalizations difficult
          1. Must be careful because people classify as third country in a number of ways
          2. ICs are increasingly geocentric, ability without race or citizenship as decision criteria, in promotion and hiring
    4. Expatriates
        1. Becoming an expatriate, or expat, as they are sometimes called
          1. Expatriate is faced with a number of issues from possibly entering limbo for the firm since the new position is so far removed from the home country processes
        2. Expatriate's family Concept Check
          1. Nine out of ten expatriates' failures are family related
          2. Stress on spouse and children is extreme
          3. Some companies offer family training in language and culture to better prepare for experience
        3. Expatriate children suffer the most
          1. Some companies are using special programs to prepare and to support children of expatriates during process
        4. Trailing spouses and two-career families
          1. Some companies have special programs to assist trailing spouses (left behind the expatriate) to adjust
          2. Some even hire the spouse to support the second career
        5. You can't go home again
          1. Reverse culture shock occurs when the expatriate returns to home country
        • Discussion should occur before the assignment about how the experience will fit in the employee's long-term goals
    5. Language training
      • Prevent language trap, speaking only the language of home country
      • English is the Lingua Franca of world business
      • Do not count on English knowledge among foreign contacts
    6. Women PowerPoint (31.0K)
      • Role of women in international business is increasing
      • Glass ceiling has been a perceived limitation on women's advancement in industry in general Concept Check
      • Female executives are on their way through the ceiling
        1. Women are propelled into corporate power positions by technology and globalization
        2. Possible "brain drain" as women fin d corporate management not to their liking
        3. Women in India are finding more opportunity in a country with traditional limitations on the roles of women
    7. Résumé: How to avoid getting hired
      • Use demanding tone or language in the résumé
      • Make typographical errors and use bad grammar
    8. Selection Dos and Don'ts
      • Executive sometime lose sight of the cultural differences among countries
      • There is no common "business culture"
      • One check list suggests Concept Check
        1. Do promote from within
        2. Don't promote an insider if an outsider is clearly better qualified
        3. Don't be blinded by language fluency
        4. Do assess the goals of the person
      • Although cultural differences exist, some say good managers share traits no matter where they're from
  3. Compensation PowerPoint (31.0K)
    1. Salaries
      • Paying home country nationals the same salaries as the domestic counterparts permit world wide consistency for compensation
      • The equal-pay-for-equal-work concept sometimes extends to host country nationals
      • Some countries have tradition of paying executives lower salaries by offering perks such as cars, drivers, housing, club memberships, etc
    2. Allowances Concept Check
      • Allowances are payments made to compensate expatriates for the extra costs they incur as they live abroad
      • Most common allowances are housing. Cost of living, tax differentials, education and moving
      • Housing allowances
        1. Designed to permit executives to live in houses as good as the ones they lived in at home
        2. Typically will pay all housing costs greater than 15% of the executive's salary
      • Cost-of-living allowances
        1. Based on differences in price of food, utilities, transportation, entertainment, clothing, personal services, and medical expenses
        2. The US Department of State index is used for comparison'
        3. Many companies use the United nations, World Bank International Monetary fund or private consultants to ensure a more accurate assessment
      • Allowances for tax differences
        1. ICs pay differential for taxes that are higher than taxes the expatriate would pay on the same compensation at home
        2. Objective is to ensure the expatiate doesn't end up with less take-home dollars than he or she would have in home country
      • Education allowances
        1. Expatriates want their children to receive education at least as good as home
        2. Some better schools in some host countries are private schools with tuition and fees
        3. Some companies operate their own schools
      • Moving and orientation allowance
        1. Generally companies pay all expenses of moving expatriate to assignment sites
        2. Includes household effects and maintaining the family until goods arrive
        3. Orientation to country is also frequently paid for by company
    3. Bonuses
      • Bonuses
        1. Paid for firms to recognize the hardships endured by expatriates and families
        2. Includes overseas premiums, contract termination payments, and home leave reimbursement
      • Overseas premiums
        1. Payment over salary that is a percentage of salary
        2. Range from 10 to 25%
      • Contract termination payments
        1. These are inducements for employees to stay on their jobs and compete periods of assignment
        2. Payments made at end of contract period
      • Home leave
        1. Allows periodic trips to home country
        2. Companies do not want employees to lose touch with home country
        3. Companies want employees to spend a few days at home office every so often to catch up on company policies
    4. Compensation packages can be complicated
      • What percentage?
        1. Allowances and percentage of base salary are usually paid in home country currency
        2. Keeps payment in host country currency small to reduce tax liability
      • What exchange rate?
        1. Currency exchange rates on compensation packages are complicated
        2. Some countries have managed exchange rates that may either inflate or deflate actual exchange value
        3. Stock option plans are common in American companies but face restrictions in other countries
    5. Compensation of third country nationals
      • A trend exists to compensate third country nationals the same as home country executives
      • Home visits are a problem for third country executives, they do not need culture exposure and the headquarters are not in the third country
    6. International Status
      • All of the previous discussion centers on expatriates who have been granted international status
      • Expatriates can be hired in host country subsidiaries without international status and not receive the compensation package benefits described
    7. Perks PowerPoint (29.0K)
      • These are additional points of compensation and serve as a symbol of rank in organizations
      • Book offers a list of tings fro cars to vacations considered as possible perks
    8. What's important to you?
      • Costs of living differ throughout the world based on what may be important as a preferred item of lifestyle
      • Care must be taken to evaluate the cost of preferred items when negotiating compensation packages




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