Transcript Managing the Multinational Enterprise

Course structure
Classes 1-4
International business environment
Regional vs. global
Triad and IB activities
Politics, culture, trade and finance
Classes 5-9
Firm-specific advantages and firm management
Organization
Production
Marketing
International HRM
Political risk management
International financial management
Class 10
Country-specific advantages
Classes 11-14
Locational choice and regional management
European Union, North America, Japan, and Emerging Markets
International HRM
(cross-cultural management)
Expatriation
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Finding and sending employees overseas, a process called
expatriation. Those employees are called expatriates (or
expats).
Headquarter
Selecting and hiring
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Who do we want to hire for our overseas assignments?
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Where can we find them?
Source: Reprinted from Columbia Journal of World Business, Summer 1973, Lawrence G. Franko, “Who Manages Multinational Enterprises?” page 33,
Copyright 1973, with permission from Elsevier Science
Gong (2003), based on a survey of 695 Japanese MNEs.
Selection test/interview
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Cultural adaptability
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Men tend to adjust slightly faster than women
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People over 35 have somewhat higher levels of satisfaction after the first year
Checklist for adaptability
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Work experiences with cultures other than one’s own
Previous overseas travel
Knowledge of foreign languages
The ability to solve problems within different frameworks
and from different perspectives
Overall sensitivity to the environment
Selection (cont’d)
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Self-reliance and independence
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Age, experience, and education
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Health and family status
 52% of US MNEs interview both managers and spouses.
 A study of 332 repatriates and spouses found most dissatisfaction with
MNEs resulted from lack of employment support for the trailing spouse.
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Motivation and leadership
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Relatively more motivated people
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Unmarried
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Married couples without children at home or those with non-teenage children
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Prior international experiences
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More committed and loyal employees
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Careers and attitudes of spouses
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High leadership potential
Training programs
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Research shows that the following six types of
programs are most popular:
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Environmental briefings used to provide information about such things as
geography, climate, housing and schools.
Cultural orientation designed to familiarize the individual with cultural
institutions and value systems of the host country.
Language training.
Sensitivity training designed to develop attitudinal flexibility.
Field experience, which sends the participant to the country of assignment to
undergo some of the emotional stress of living and working with people
from a different culture.
Cultural assimilators using programmed learning approaches designed to
provide the participants with intercultural encounters.
Compensation package
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Common elements in an international compensation
package
 Base salary: the amount of cash compensation that an
individual receives in the home country.
 Benefits
 Allowances
 Cost-of-living allowance: payment to compensate
for differences in expenditures between the home
country and the foreign location.
 Hardship allowance: is a special payment made to
individuals who are posted to areas that are regarded
as less desirable.
 Tax protection and/or tax equalization.
Repatriation of expats
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Repatriation is the process of returning home at the end
of an overseas assignment.
Headquarter
Repatriation of expats
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Repatriation is the process of returning home at the end
of an overseas assignment.
Headquarter
Repatriation of expatriates
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Reasons for repatriation:
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The predetermined time assignment is completed.
Expatriates’ desire to have their children educated in the
home country.
Expatriate might be unhappy overseas.
Expatriate might have performed poorly.
Readjusting
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Expatriates might find it difficult to adjust back to
the home environment. A number of reasons can
be cited:
 The home office job lacks the high degree of
authority and responsibility that expatriates had
in their overseas job.
 A feeling that the company does not value
international experience.
 They may no longer be well known among
people at headquarters.
 Their old job may have been eliminated or
drastically changed, technological advances at
headquarters may have rendered their existing
skills and knowledge obsolete.
Adjustment strategies
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Transition strategies are designed to
help smooth the move from foreign
to domestic assignments.
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The repatriation agreement, which spells
out how long a person will be posted
overseas and sets forth the type of job the
person will be given upon returning.
To rent or maintain the expatriate’s home
during the overseas tour.
To maintain ongoing communications with
expatriate managers, thereby ensuring that
they are aware of what is happening in the
home office.
Labor relations in
foreign countries
Labor unions worldwide (percentage of labor force that is unionized)
Source: International Labor Organization, World Labor Report in 2001
Industrial democracy
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Forms of industrial democracy.
 Codetermination: a legal system that requires workers and
their managers to discuss major strategic decisions before
companies implement the decisions.
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Work councils: groups that consist of both worker and
manager representatives and are charged with dealing with
matters such as improving company performance, working
conditions, and job security.
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Popular in Europe: legally mandated in Austria, Denmark, the Netherlands,
and Sweden
Most powerful in Germany, the Netherlands, and Italy, although popular
throughout Europe
Shop floor participation: giving workers an opportunity to
make their voices heard
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Popular in EU nations and the US
Managing a new international team
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An American manager is meeting for the first time in
Japan with his international team. Please identify some
mistakes he made in this first cross-cultural environment,
and suggest what you would have done in this scenario.