Incoterms 2010 and International Business - 101
International Business: Environments and Operations, 15e (Daniels et al.)
CHAPTER TWENTY: INTERNATIONAL HUMAN RESOURCE MANAGEMENT
CHAPTER TWENTY: INTERNATIONAL HUMAN RESOURCE MANAGEMENT
OPENING CASE: Globalizing Your Career?
Today’s global companies are increasingly looking for managers who are comfortable on the world stage. International companies use expatriate managers to varying degrees, some extensively and some sparingly. Many companies develop their managers for years before assigning the manager to an overseas position. Laying the foundation for a possible career in international business is hard work, and the experience of actually working internationally can be even harder. Managers in foreign assignments are usually given much broader responsibilities than they have experienced in their home country. After completing an international assignment, repatriation to the home country presents major challenges as well. Despite the challenges of international careers, more and more CEOs assert that international experience is an essential feature of a high-performance career.
Questions
20-1. From the text and tabular material presented in the case, select three compelling reasons to pursue a career in an international business.
There has always been a certain mystic, excitement, and aura about travelling and especially working internationally. International assignments typically offer a much greater degree of autonomy than other corporate positions. Simply because the individual is located away from headquarters, there is less daily oversight, but there are also higher expectations for accomplishing successful results. This is ideal for individuals who have a strong sense of achieving objectives and goals. The international assignment allows emergence in a new culture, geography, and language. In addition, it is ideally suited for the individual who loves the challenge of change, and is flexible enough to adapt to these changes, living abroad can be very rewarding. However, for people who need to have predictability, control, and calm, international assignments can be a potential problem.
(LO: 1, Learning Outcome: To discuss the importance of human resource management, AACSB: Dynamics of the Global Economy)
20-2. Identify and discuss three benefits that you believe would follow from working as an expatriate in a foreign market (benefits can be related to career aspirations, personal goals, or general interests).
There are several benefits to a U.S. person living and working outside the United States in terms of tax liability, work environment, and even short- and long-term opportunities.
Foreign language skills and intercultural competence make them a valuable employee – expatriate assignments can also bring financial benefits. An expatriate assignment may qualify you for a promotion upon your return. During an assignment, you often learn a new language and perhaps even become fluent in it. Once you return to your company’s headquarters, this may make you a top-notch candidate for a new position higher up the management ladder., or if you should decide to change employers, an additional foreign language looks very good on your resume. Even if you are self-employed, this knowledge might help you acquire new clients or different projects. An expatriate will also benefit from the additional experience he or she gains in their chosen field, providing them with a new focus and more relevant details to add to their resume.
Once an expatriate has satisfied certain out-of-the-country presence tests, usually at the one-year mark, the expat can take a foreign earned income exclusion in conjunction with the foreign tax credits to reduce his or her tax liability. (LO: 1, Learning Outcome: To discuss the importance of human resource management, AACSB: Dynamics of the Global Economy)
CLOSING CASE: Tel-Comm-Tek (TCT) [See Map 20.1]
Tel-Comm-Tek (TCT) manufactures a variety of small office equipment such as copying machines, dictation units, laser printers, and paper shredders. The company is headquartered in the U.S., but has an Indian subsidiary. Mark Hopkins, the managing director of TCT’s Indian subsidiary, has just resigned and needs to be replaced. Six candidates have been identified as possibilities to fill the position. Due to plans for the construction of a factory in Bengaluru, the new director will need to have manufacturing experience as well as the ability to function effectively in other aspects of the position.
_________________________
QUESTIONS
20-3 Identify the two key advantage of each candidate. Identify their liabilities. Rank order the candidates from most to least qualified, for the position of managing director of TCT India.
There are a number of good candidates for the position. Depending upon the firm’s HR philosophy, different candidates could be viewed as the best choice. The best candidate from an ethnocentric point of view is either Tom Wallace or Brett Harrison. Wallace has the edge over Harrison due to his longer tenure with TCT and relevant experience with a similar operation in the U.S. From a polycentric approach, Saumitra Chakraborty would be the best selection. Although young, he is well connected with the local business community and would be best able to integrate TCT’s operations into the local situation. From a geocentric perspective, Jalan Bukit Seng is a good fit. He has a broad multicultural background and experience managing a similar operation successfully in Malaysia. It is critical that TCT have a person with line experience in the position to assure product quality and to control costs. Tom Wallace has that experience and would be able to manage the company’s operations well. A case could be argued for a number of the candidates. The best choice is dependent on the overall orientation of the firm and is somewhat subjective. (LO: 4, Learning Outcome: To assess how MNEs select, prepare, compensate, and retain managers, AACSB: Analytical Skills)
20-4 What operational as well as personal challenges might the person you recommend encounter if named Managing Director?
Tom Wallace:
Pros:
• 4.5 years from retirement
• experienced in the technical and sales aspects of the job
• managing a plant of similar size
• expressed interest in foreign assignment
• performance rated proficient
• grown children living in United States
• age and experience may be valued
Cons:
• Wallace and his wife know only English
• He is not a management star
• may be resented by local management
Brett Harrison:
Pros:
• rated highly competent
• poised to move to upper-level
• experience in Asian regional office
• acquainted with Bengaluru expatriates
• well acquainted with India
Cons:
• Harrison may not view position as a management promotion
• teenage children
• wife has career—unable to relocate
Atasi Das:
Pros:
• rated excellent and upwardly mobile
• experienced in both staff and line positions
• expressed goal of foreign assignment
• speaks Hindi
• single; no children
• sees international experience as an essential career step
Cons:
—
Ravi Desai:
Pros:
• assistant managing director in larger Asian operation
• citizen of India
• speaks English and Hindi
• married with four young children
Cons:
—
Jalan Bukit Seng:
Pros:
• managing director of TCT’s assembly operations in Malaysia
• performance rating positive-excellent
• single
• citizen of Singapore
Cons:
—
Saumita Chaka:
Pros:
• no moving or adjustment problems
• performance rated competent
• single
• excels in employee relations
• personal connections with prominent families and local officials
• speaks Kannada, Hindi, and English
Cons:
• only 27
• lacks line experience
(LO: 4, Learning Outcome: To assess how MNEs select, prepare, compensate, and retain managers, AACSB: Analytical Skills)
20-5 What steps would you recommend your preferred candidate take to manage those challenges?
Tom Wallace:
• Offer orientation and language training for Wallace and his wife.
• Provide training visits to similar operations elsewhere.
• Offer extra encouragement so Wallace feels valued.
Brett Harrison:
• Offer special commuting arrangements so his wife can maintain her career.
• Offer fixed-term assignment.
• Provide assistance in selecting and settling the children into schools.
Atasi Das:
• Offer advanced work with local management.
Ravi Desai:
• Offer advanced work with local management.
Jalan Bukit Seng:
• Offer orientation and language training.
• Provide training visits to similar operations elsewhere.
Saumita Chaka:
• Provide staff assistance from headquarters.
• Provide technical training and development at headquarters.
(LO: 4, Learning Outcome: To assess how MNEs select, prepare, compensate, and retain managers, AACSB: Analytical Skills)
20-6 How should the compensation package differ if TCT U.S. opted for a short-term versus long-term expatriate assignment?
There is a good deal of variation among firms with respect to the ways they compensate managers abroad. In this instance, TCT needs to consider the base salary each employee is earning, as well as the cost-of-living adjustment necessary to relocate the employee to Bangalore. Housing allowances and tax differential compensation may also be in order. (LO: 4, Learning Outcome: To assess how MNEs select, prepare, compensate, and retain managers, AACSB: Analytical Skills)
20-7 For a moment, let’s return to the issues covered in Chapter 15 regarding the matrix structure. Assume TCT adopts this structure for its Indian operation. What benefits might result by appointing two different individuals to the position of co-managing director of TCT India – effectively, one person would supervise sales and customer relations while the other would supervise manufacturing. Each slot would command equal positional authority and each person would be charged to co-manage with his or her counterpart. What benefits problems might result from this arrangement? What problems, if any, might occur?
If the position is split between internal and external operations, then some possible benefits could be argued on the basis of skill specialization. For the external affairs position the clear choice is Chakraborty due to his important Indian connections. The internal affairs position could be filled by Desai, Harrison, or Das. All three are competent and able to handle the internal operations of the position. One must remember that the matrix design of organization violates a basic principle of management – the unity principle. Problems result when a person has more than one boss or manager. Issues of time allocation, loyalties, and potential conflicts generally make the matrix organization difficult to implement. (LO: 4, Learning Outcome: To assess how MNEs select, prepare, compensate, and retain managers, AACSB: Analytical Skills)
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