International HRM consists of interplay among three dimensions: the broad function, Country categories and types of employees. Factors differentiating international from domestic HRM are additional activities such as, developing a global mindset in the organization, international taxation, exchange rates, relocation and orientation, providing international administrative services, foreign government relations, and providing foreign language and cultural training. The book stresses the training of not only verbal language training, but training of non-verbal communication. This is similar to the case study when the American manager felt uncomfortable with how the minister was touching his shoulder when speaking. In Latin America, the personal bubble is much smaller than that of the U.S. This is a prime example, of how HRM did not properly prepare the manager for the business culture of their country.
As previous chapter have discussed, HRM plays a very large role when selecting expatriates and can be the ultimate reason of failure or success. One important function of HRM is designing programs for more than on national group of employees, resulting in a need to take a more global view. Also HRM needs to take a much bigger involvement in expatriates’ lives compared to domestic workers. Expatriates need to be informed of things such as exchange rates, cost of living, and so on. The book goes on to talk about other parts of preparation such as international terrorism. Expatriates need proper training with the goal of the expatriate not returning home due to the fear of the expatriate being kidnapped for ransom and/or robbed. Other external influences include the types of government, state of country’s economy, and general accepted business practices in host countries all that all need to be addressed by HRM.
There are different MNC’s expatriation practices that vary from country to country. For instance, in Japan the duration of foreign assignments is significantly longer than that of the U.S. (4.67 years). Japan actually has a very low incidence rate of expatriate failure maybe due to their HRM functions and the support system of the corporate headquarters. European expatriates have an extensive international perspective as is, making them perfect candidates for expatriation. There are several implications that can be taken from European and Japanese expatriate practices, such as the need for U.S. expatriation to include training in cross-cultural sensitivity. Since U.S. citizens learn mostly about American culture and mainly English, this is crucial for success.
HRM has the job of selecting and training the right person for expatriation. There needs to be an extensive, sophisticated selection process. This may include analyses of family situations, lifestyles, and financial situations. If these aspects of an expatriate’s life are in turmoil, adapting overseas will be difficult resulting in possible failure. Finding out why the expatriate wants the foreign assignment is also key. The next steps cover selecting only top-notch people, familiarizing the expatriate to the country they are going to, and setting up a supportive administration solely to assist expatriates. Successful attributes are as followed:
Tolerance for ambiguity *behavioral flexibility*nonjudgmental*cultural empathy*interpersonal skills*
Belief in the mission*interest in foreign experience*stable lifestyle*nonverbal communication skills
It is becoming a growing trend that corporations are tracking and developing young managers to have a global perspective. Companies are now seeing this trait of high importance to remain globally competitive in the future. Another source for recruiting is the managers that are currently on a foreign assignment. There are several steps to evaluate the expatriate’s eligibility. Other types of recruiting come from external sources and educational institutions that deal with international travel/business.
Expatriate preparation programs will cover the corporation’s international environment, pre-expatriation, cultural briefing, assignment briefing, relocation requirements, language training, expatriation, and repatriation. Effective compensation for these expatriates can determine the success or failure of the foreign assignment. It is important to be sure that the compensation package contains benefits, a motivational salary, and more.
Wednesday, March 24, 2010
Monday, March 15, 2010
International Managerial Staffing
International businesses use three types of executives to staff their foreign subsidiaries: home-country nationals (expatriates), host country nationals (locals), and third-country nationals. Using expatriates is costly for MNC's but expatriates are capable of moving from country to country and perform effectively. There are several advantages and disadvantages pertaining to which type of staffing is used.
The advantages of using expatriates are as follows: knowledge of the corporation's culture and management techniques, loyally to the corporation, influence at headquarters, easier to access the expatriates qualifications for the assignment, and maintaining the "foreign image." These advantages can and should be considered when choosing the correct staffing. However, there are disadvantages to using expatriates such as the expensive orientation programs that teach of the foreign country's culture. Smaller to medium sized businesses have difficulty providing the finances required for maximized success of their expatriates. These programs are very costly. The other disadvantages of staffing expatriates include the unfamiliarity of the foreign environment (laws, political processes, etc..), verbal and non-verbal communication problems, the inability to adapt to the foreign culture, not finding the best person for the job, and the expensive incentives to employ these highly qualified expatriates.
Using host-country locals is one of the alternative types of staffing for MNCs. The advantages of using host-country locals include: familiarity with the local environment, early productivity, knowing the local business subtleties, high level of "goodwill", and is usually less expensive than using expatriates. The disadvantages consist of: loyalty to their country rather than the company, the difficulty of finding the right person for the job, misunderstanding of the company's corporate culture, communication problems with home office, possible ulterior motives, weakness on dealing with government officials, and the expensive training and development programs.
The last staffing alternative is using third-country personnel or an expatriate from a different country. The advantages include additional source of personal, less costly, greater adaptability, and sometimes the better relationship of the third-country personnel to the host country. The disadvantages are potential weak relationships between third-country expatriate and host country, ulterior motives, and locals' preference of appointing their own citizens to managerial positions.
Selecting the appropriate staffing strategy relies heavily on country and company characteristics, staffing outlook, and percieved needs. Company characteristics can include ownership of foreign subsidiaries, technological sophistication, organizational structure, styles of management, and more. Country characteristics range from political stability to geographical location. These characteristics dictate what strategy should be used. Even after researching these characteristics there is room for failure. Many expatriates fail due to things such as culture shock. Culture shock can handicap communication with those native to the country resulting in possible failure in conducting business. After studying in China I can easily see the application of culture shock for new expatriates and the alienation that may come of it. There are numerous ways that an expatriate can fail. Another example is the appointment of women to managerial positions. Some countries still reject the idea of women in management, which is something that should always be considered when choosing a strategy.
All in all, there are many different aspects of staffing the right people that need to be addressed before implementation. As international managers, it is crucial to do just this to maximize the success of the MNC.
The advantages of using expatriates are as follows: knowledge of the corporation's culture and management techniques, loyally to the corporation, influence at headquarters, easier to access the expatriates qualifications for the assignment, and maintaining the "foreign image." These advantages can and should be considered when choosing the correct staffing. However, there are disadvantages to using expatriates such as the expensive orientation programs that teach of the foreign country's culture. Smaller to medium sized businesses have difficulty providing the finances required for maximized success of their expatriates. These programs are very costly. The other disadvantages of staffing expatriates include the unfamiliarity of the foreign environment (laws, political processes, etc..), verbal and non-verbal communication problems, the inability to adapt to the foreign culture, not finding the best person for the job, and the expensive incentives to employ these highly qualified expatriates.
Using host-country locals is one of the alternative types of staffing for MNCs. The advantages of using host-country locals include: familiarity with the local environment, early productivity, knowing the local business subtleties, high level of "goodwill", and is usually less expensive than using expatriates. The disadvantages consist of: loyalty to their country rather than the company, the difficulty of finding the right person for the job, misunderstanding of the company's corporate culture, communication problems with home office, possible ulterior motives, weakness on dealing with government officials, and the expensive training and development programs.
The last staffing alternative is using third-country personnel or an expatriate from a different country. The advantages include additional source of personal, less costly, greater adaptability, and sometimes the better relationship of the third-country personnel to the host country. The disadvantages are potential weak relationships between third-country expatriate and host country, ulterior motives, and locals' preference of appointing their own citizens to managerial positions.
Selecting the appropriate staffing strategy relies heavily on country and company characteristics, staffing outlook, and percieved needs. Company characteristics can include ownership of foreign subsidiaries, technological sophistication, organizational structure, styles of management, and more. Country characteristics range from political stability to geographical location. These characteristics dictate what strategy should be used. Even after researching these characteristics there is room for failure. Many expatriates fail due to things such as culture shock. Culture shock can handicap communication with those native to the country resulting in possible failure in conducting business. After studying in China I can easily see the application of culture shock for new expatriates and the alienation that may come of it. There are numerous ways that an expatriate can fail. Another example is the appointment of women to managerial positions. Some countries still reject the idea of women in management, which is something that should always be considered when choosing a strategy.
All in all, there are many different aspects of staffing the right people that need to be addressed before implementation. As international managers, it is crucial to do just this to maximize the success of the MNC.
Friday, March 12, 2010
International Strategies
One major component to entering a new market as an international business, is to be sure the product and/or service matches the needs of the market. Things that can affect the failure or success of a newly introduced product can range from cultural traits, values, habits, and norms. There is a lot of research needed to put into these concepts to ensure that the product/service is appropriate for that foreign market. The book uses an example of how Americans prefer moist creamy dessert cakes, which differs from England which prefer dry cakes that can be eaten with tea.
There are four basic questions that international strategists should seek to answer:
Who in the foreign market uses the product?
What are the values of the people in the foreign market?
What are the signals that indicate change in the market?
How can the firm increase market share.
One can see the importance of these questions. There are several ways to tackle these questions. When using product strategy there are five types using different alternations of standardized/customized messages and products. By combining these strategies with the 3 fundamental alternatives successful implementation of a product is possible. This is similar to how MTV entered China, adhering to the cultural differences and traditions to become one of the most successful transnational media corporations.
On the subject of service, there are three broad service categories: people-processing services, possession-processing services, and information-based services. These three strategies facilitate balancing standardization with local customization. Similar to product strategies, these are crucial to the success of international businesses.
All in all, international managers have several strategies that will differ from nation to nation. Carefully analyzing and implementing the right strategy is key for success. The four "P's" of marketing also come into play when approaching entering a foreign market. For manufacturing, different approaches consist of licensing, franchising, management contracts, joint ventures, contractual alliances, and wholly owned subsidiaries. Each approach has a different level of risk pertaining to investment, which must be considered upon penetrating foreign markets. International expansion can prove to be highly profitable or detrimental to the business.
There are four basic questions that international strategists should seek to answer:
Who in the foreign market uses the product?
What are the values of the people in the foreign market?
What are the signals that indicate change in the market?
How can the firm increase market share.
One can see the importance of these questions. There are several ways to tackle these questions. When using product strategy there are five types using different alternations of standardized/customized messages and products. By combining these strategies with the 3 fundamental alternatives successful implementation of a product is possible. This is similar to how MTV entered China, adhering to the cultural differences and traditions to become one of the most successful transnational media corporations.
On the subject of service, there are three broad service categories: people-processing services, possession-processing services, and information-based services. These three strategies facilitate balancing standardization with local customization. Similar to product strategies, these are crucial to the success of international businesses.
All in all, international managers have several strategies that will differ from nation to nation. Carefully analyzing and implementing the right strategy is key for success. The four "P's" of marketing also come into play when approaching entering a foreign market. For manufacturing, different approaches consist of licensing, franchising, management contracts, joint ventures, contractual alliances, and wholly owned subsidiaries. Each approach has a different level of risk pertaining to investment, which must be considered upon penetrating foreign markets. International expansion can prove to be highly profitable or detrimental to the business.
Friday, February 12, 2010
The Global Environment
The beginning of chapter 3 discusses the impacts of tariffs, place quotas, and embargos in domestic environments. Companies that need products from countries that have imposed embargo acts will find a way to obtain them. The real issue becomes not actually getting these products, but the increased costs to over come. The book discusses an example that if a U.S. company needed a product from Cuba, the company would have Cuba trade the products to another country such as Canada, which has no embargo imposed and get the product through that channel. This "middleman" results in higher costs. This example stresses the fact that international managers need to be well aware of nations' tariff and quota practices, as well as embargos.
There are different aspects to consider when exporting, importing, outsourcing, etc... Managers need to knowledgeable of the domestic competitive climate as well as the domestic economic climate. These two are crucial for international managers to make big decisions. A manager wouldn't want to be beat by a competitor with a similar strategy on penetrating the same international market. Also being aware of the domestic economic climate could be vital for a struggling company to survive in a weak domestic economy.
An important part of the chapter talks about the formation of the European Union. The EU is made up of 27 European nations and is taking a similar idea that of the U.S. The book states how citizens will describe themselves as "European" rather than German when traveling internationally . Similar to the U.S., one would describe themselves as "American" instead of a "Californian." The EU poses a threat to external companies in regards to protectionism and preferential treatment. It also poses a threat to external companies as potentially not being in contact with the standard-setting body of the EU. This may cause violations of the EU product and safety standards.
NAFTA (North American Free Trade Agreement) - This agreement began in January of 1994 including the countries of Canada, Mexico, and the U.S. This was originally formed to combat the EU, but its mission is quite different from the EU. The NAFTA is still in the early stages of a union and not as cooperative as the EU, but has been successful to reduce tariffs, remove the restrictions of certain products imported/exported, and increase investment opportunities.
One of the more important topics reviewed in chapter 3 is the awareness of cultural differences. Businesses need to adapt to the cultures of new markets they are attempting to enter. An example used in the book was KFC's attempt to enter Brazil. Since the company lacked to recognize the cultural differences between the U.S. and Brazil, their approach failed miserably. This topic is such an important part for a business to succeed in any other country. Culture also affects the way business is conducted.
Competition is viewed very differently from country to country. Some countries consider competition to be a wasteful practice. Japan, for instance, views competition as a wasteful practice, as its main goal is to gain the largest market share while keeping all of their citizens employed. This is very different from the U.S. when competition is wired into our psyches at a very young age. The book touches on topics such as cartels and government owned enterprises in regards to competition. Tariffs and quotas also play a big role in global competition.
There are different aspects to consider when exporting, importing, outsourcing, etc... Managers need to knowledgeable of the domestic competitive climate as well as the domestic economic climate. These two are crucial for international managers to make big decisions. A manager wouldn't want to be beat by a competitor with a similar strategy on penetrating the same international market. Also being aware of the domestic economic climate could be vital for a struggling company to survive in a weak domestic economy.
An important part of the chapter talks about the formation of the European Union. The EU is made up of 27 European nations and is taking a similar idea that of the U.S. The book states how citizens will describe themselves as "European" rather than German when traveling internationally . Similar to the U.S., one would describe themselves as "American" instead of a "Californian." The EU poses a threat to external companies in regards to protectionism and preferential treatment. It also poses a threat to external companies as potentially not being in contact with the standard-setting body of the EU. This may cause violations of the EU product and safety standards.
NAFTA (North American Free Trade Agreement) - This agreement began in January of 1994 including the countries of Canada, Mexico, and the U.S. This was originally formed to combat the EU, but its mission is quite different from the EU. The NAFTA is still in the early stages of a union and not as cooperative as the EU, but has been successful to reduce tariffs, remove the restrictions of certain products imported/exported, and increase investment opportunities.
One of the more important topics reviewed in chapter 3 is the awareness of cultural differences. Businesses need to adapt to the cultures of new markets they are attempting to enter. An example used in the book was KFC's attempt to enter Brazil. Since the company lacked to recognize the cultural differences between the U.S. and Brazil, their approach failed miserably. This topic is such an important part for a business to succeed in any other country. Culture also affects the way business is conducted.
Competition is viewed very differently from country to country. Some countries consider competition to be a wasteful practice. Japan, for instance, views competition as a wasteful practice, as its main goal is to gain the largest market share while keeping all of their citizens employed. This is very different from the U.S. when competition is wired into our psyches at a very young age. The book touches on topics such as cartels and government owned enterprises in regards to competition. Tariffs and quotas also play a big role in global competition.
Monday, February 8, 2010
Cross National Ethics and Social Responsibility
Chapter 2 goes into detail about the meaning of ethics and how they differ from country to country. What maybe acceptable here in the U.S. may not be applicable to the rest of the world. It also gets into the idea that a concept such as bribery could be legal in one country, but socially unaccepted. This can lead to informal punishment such as poor publicity, boycotts, and other detrimental things to a company.
The book further dissects the subject of bribery with the different forms. A Whitemail bribe is a payment made to an official that must do or omit doing something in violation of their lawful duty. A lubrication bribe is a payment to facilitate, expedite, or speed up routine government approvals or other actions or other actions to which the firm would be legally titled. Lastly, extortion is the opposite of a Whitemail bribe as the official is seeking payment from an individual or corporation.
There are several ways to avoid violating a host country's laws. Some tips the book offer are continuously learning about the cultures and/or hiring a local journalist to do a comprehensive local media search. It is very crucial to understand the repercussions of violating the laws and ethics when conducting business in another country.
The FCPA (Foreign Corrupt Practices Act) became law in 1977. The act had 2 main purposes which was to establish a worldwide code of conduct for any kind of payment by U.S. businesses to foreign government officials, political parties, and political candidates. The second purpose was to require appropriate accounting controls for full disclosure of firms transactions.
Though the FCPA constrains some businesses' competitiveness, these businesses have found a way around violating the FCPA such as making donations to build new hospitals or schools. By making donations, and not making payments to "private individuals"; these businesses are no longer violating the FCPA and actually are helping a community. This is a great alternative to bribery and enhances their corporate giving initiatives.
An important part of chapter 2 is the cross-national social responsibilty concept. This is a "notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law or union contract." This concept guides corporations to not only treat themselves fairly, but to cover the community, employees, and customers.
Terms
Cultural Relativism is an idea that no culture's ethics are any better than any other's.
Universalism is an idea of a rigid global yardstick by which to measure all moral issues.
The book further dissects the subject of bribery with the different forms. A Whitemail bribe is a payment made to an official that must do or omit doing something in violation of their lawful duty. A lubrication bribe is a payment to facilitate, expedite, or speed up routine government approvals or other actions or other actions to which the firm would be legally titled. Lastly, extortion is the opposite of a Whitemail bribe as the official is seeking payment from an individual or corporation.
There are several ways to avoid violating a host country's laws. Some tips the book offer are continuously learning about the cultures and/or hiring a local journalist to do a comprehensive local media search. It is very crucial to understand the repercussions of violating the laws and ethics when conducting business in another country.
The FCPA (Foreign Corrupt Practices Act) became law in 1977. The act had 2 main purposes which was to establish a worldwide code of conduct for any kind of payment by U.S. businesses to foreign government officials, political parties, and political candidates. The second purpose was to require appropriate accounting controls for full disclosure of firms transactions.
Though the FCPA constrains some businesses' competitiveness, these businesses have found a way around violating the FCPA such as making donations to build new hospitals or schools. By making donations, and not making payments to "private individuals"; these businesses are no longer violating the FCPA and actually are helping a community. This is a great alternative to bribery and enhances their corporate giving initiatives.
An important part of chapter 2 is the cross-national social responsibilty concept. This is a "notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law or union contract." This concept guides corporations to not only treat themselves fairly, but to cover the community, employees, and customers.
Terms
Cultural Relativism is an idea that no culture's ethics are any better than any other's.
Universalism is an idea of a rigid global yardstick by which to measure all moral issues.
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