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CHAPTER 20 Human Resource Management 1. A factor that makes management of international human resources different from management at the domestic level is _____. a. the complications posed by putting the right person into the right job in the right place at the right time for the right salary b. the challenge posed by managers in other countries that aim to achieve global objectives for the company no matter the costs imposed on national objectives c. the greater similarity among foreign subsidiaries than among domestic subsidiaries in terms of dependence on headquarters for resources d. the complications posed by dealing with competing agendas from different labor unions in different countries Answer: a. the complications posed by putting the right person into the right job in the right place at the right time for the right salary 2. HRM refers to the range of activities that a company, whether solely domestic or thoroughly global, _____. a. direct its strategy b. staff its organization c. improve its responsiveness d. integrate various business function Answer: b. staff its organization 3. _____ refers to the activities that an organization carries out to put the right person into the right job in the right place at the right time for the right salary. a. Work force analysis b. Staff development c. Human resource management d. Leadership planning Answer: c. Human resource management 4. Determining a firm's human resource needs, staffing policy, management development, motivation and compensation practices, repatriation, and labor relations are practices that fall under the direction of elements of _____. a. value chain configuration and coordination b. internal-external management c. human capital development d. human resource management Answer: d. human resource management 5. Anecdotes suggest and research confirms a ¬¬_____ relationship between HRM processes, management productivity, and strategic performance in the international company. a. trivial b. unpredictable c. simple d. powerful Answer: d. powerful 6. Research reports that superior human re¬sources in the international company can do all of the following except _____. a. sustain high productivity b. boost competitive advantage c. inspire competitors d. enhance value creation Answer: c. inspire competitors 7. The Human Capital Index, based on a comprehensive global study of more than 2,000 companies, found that superior human capital practices was ¬¬_____ correlated with a firm's financial returns as well as a(n)¬¬_____ indicator of increased shareholder value . a. negatively; lagging b. positively; leading c. insignificantly; timely d. weakly; accurate Answer: b. positively; leading 8. There is growing consensus that human resource managers must hire, develop, reward, and retain people whose performance explicitly improves the _____. a. pro¬ductivity of the firm's core competencies b. fits between company practice and industry standards c. the firm's engagement of political authorities d. firm's responsiveness to customer expectations Answer: a. pro¬ductivity of the firm's core competencies 9. All of the following are examples of a local except _____. a. U.S. manager working for. a U.S. firm in the United States b. a Swiss manager working for a Swiss firm in the United States c. a U.S. manager working for a Swiss firm in the United States d. a Swiss manager working for a U.S. firm in Switzerland Answer: b. a Swiss manager working for a Swiss firm in the United States 10. Natives of the country where an overseas subsidiary is located are _____. a. expatriates b. host country nationals c. third country nationals d. home country nationals Answer: b. host country nationals 11. Home country nationals are _____. a. used a great deal abroad by polycentric companies b. citizens of the countries in which they are working c. citizens of the country where the company is headquartered d. noncitizens of the countries in which they are working Answer: c. citizens of the country where the company is headquartered 12. An example of a third country national is a _____. a. dual citizen (Canadian and U.S. citizenship) working for a Mexican company in Mexico b. Canadian citizen working for a U.S. company in Canada c. U.S. citizen working for a U.S. company in Canada d. Canadian citizen working for a U.S. company in Mexico Answer: d. Canadian citizen working for a U.S. company in Mexico 13. The task of HRM _____ defining the staffing polices that will guide how the company will fill international jobs with those individuals who have the skills needed to perform a particular job in ways that support the company's strategy. a. begins by b. concludes with c. never worries abouts d. deemphasizes the primacy of Answer: a. begins by 14. The emergent challenges of globalization put greater pressure on HRM to _____. a. recruit people whose values conform to the specific type of strategy the company is following b. find people whose professional values are congruent with the leadership ideals of the company c. staff people who command needed skills and competencies d. develop people with the necessary competencies Answer: b. find people whose professional values are congruent with the leadership ideals of the company 15. The emergent challenges of globalization put greater pressure on HRM to find expatriates who are more likely to _____. a. surround themselves with large support staff b. spend less time on the job than other managers c. be a generalist rather than a specialist d. be politically sensible and economically prudent Answer: c. be a generalist rather than a specialist 16. Many executives believe that _____ is the key to the success of a career in international business. a. administrative talent b. cultural sensitivity c. technical competence d. personal leadership Answer: d. personal leadership 17. The _____ component of HRM is concerned with selecting the right employees for particular jobs. a. training policy b. compensation policy c. leadership development d. staffing policy Answer: d. staffing policy 18. The strategic values and leadership ideals of a company translate into the assumptions and generalizations that define its _____. a. way of doing things b. standard operating procedures c. interpretative framework d. company objectives Answer: c. interpretative framework 19. General Electric's transnational strategy hinged on how well the company could "globalize the intellect of the company." This goal, in turn, has required that General Electric staff its worldwide operations with people who command the technical competencies required for performing the jobs but who also _____. a. command the skills to achieve short term objectives b. share the values that support the company's chosen strategy c. have values that fit the standards in specific parts of the works d. realize that "Value don't get you there. Objectives do." Answer: b. share the values that support the company's chosen strategy 20. The three types of interpretative frameworks in international businesses are _____. a. ethnocentric, polycentric, and geocentric b. ethnocentric, intercentric, and monocentric c. monocentric, neocentric, and polycentric d. intracentric, geocentric, and neocentric Answer: a. ethnocentric, polycentric, and geocentric 21. The company with a(n) _____ interpretative framework believes that successful business practices at home need not change when transferred to foreign markets. a. ethnocentric b. polycentric c. geocentric d. intercentric Answer: a. ethnocentric 22. A(n) _____ interpretative framework sees tinkering with a prized formula just to go overseas as unreasonably risky to protecting and leveraging the company's core competency. a. polycentric b. ethnocentric c. geocentric d. intercentric Answer: b. ethnocentric 23. A(n) _____ staffing policy set assumes that the practices and procedures that work at headquarters will work in foreign operations; as such, key management positions are filled by parent company nationals. a. polycentric b. intercentric c. ethnocentric d. geocentric Answer: c. ethnocentric 24. An ethnocentric staffing policy has some notable drawbacks; notably, an ethnocentric staffing policy limits advancement opportunities for host country nationals and second, it _____. a. discourages cultural myopia b. is a complicated administrative approach c. is illegal in some situations d. can make it difficult to recruit qualified local nationals Answer: d. can make it difficult to recruit qualified local nationals 25. A(n) _____ manager champions the ways of foreign markets as comparable, if not more enlightened, than the practices of his or her parent company and home nation. a. ethnocentric b. geocentric c. intercentric d. polycentric Answer: d. polycentric 26. The company with a(n) _____ interpretative framework accepts the importance of adapting to differences, real or imaginary, between the home and host country; as such, key management positions are filled by host country nationals. a. ethnocentric b. geocentric c. polycentric d. intercentric Answer: c. polycentric 27. A polycentric staffing policy requires _____ to manage local subsidiaries, while _____ occupy key executive positions at corporate headquarters. a. parent country nationals; contract employees from an international employment firm b. host country nationals; parent country nationals c. parent country nationals; host country nationals d. contract employees from an international employment firm; host country nationals Answer: b. host country nationals; parent country nationals 28. Advantages of adopting a polycentric approach include that it _____. a. capitalizes on the availability of qualified local managers b. helps transfer core competencies from the home nation to local subsidiaries c. increases the international career mobility for local managers d. offsets tendencies for the company to overly adapt to the local market Answer: a. capitalizes on the availability of qualified local managers 29. A(n) _____ staffing policy seeks the best people for key jobs throughout the organization, regardless of nationality. a. geocentric b. intercentric c. polycentric d. ethnocentric Answer: a. geocentric 30. Which of the following interpretative frameworks does not automatically presume that a particular nation provides a universal solution to every problem or a perfect explanation for every action? a. ethnocentric b. geocentric c. polycentric d. intercentric Answer: b. geocentric 31. Which type of management bases its operations on an informed knowledge of home and host country needs, capabilities, and constraints? a. intercentric management b. polycentric management c. geocentric management d. ethnocentric management Answer: c. geocentric management 32. The advantages of the geocentric outlook to staffing include that it _____. a. helps people see the full scale of the special virtues of a particular country b. gives people a predominant and persistent point of perspective c. removes most behavioral barriers to fully adapting to the chosen local market d. leverages an individual's or company's unique competencies to build a strong management network Answer: d. leverages an individual's or company's unique competencies to build a strong management network 33. A(n) _____ strategy is well matched with an ethnocentric staffing policy? a. multidomestic b. transnational c. intercentric d. global Answer: d. global 34. A(n) _____ strategy is well matched with a polycentric staffing policy. a. transnational b. international c. multidomestic d. global Answer: c. multidomestic 35. A(n) _____ strategy is well matched with a geocentric staffing policy. a. multidomestic b. transnational c. intercentric d. international Answer: b. transnational 36. Firms with global strategies as opposed to multidomestic strategies are more likely to use _____. a. expatriate managers b. host country nationals in top management positions abroad c. local managers d. home country nationals in corporate positions Answer: a. expatriate managers 37. All of the following are areas that companies focus on when selecting an expatriate for an international assignment except _____. a. financial status b. functional expertise c. language proficiency d. leadership ability Answer: a. financial status 38. Historically, the most important criterion in selecting individuals for transfer is _____. a. cognitive skills for understanding what is happening in the host society b. the technical knowledge of the tasks to be done c. skills necessary for stress reduction and self-confidence d. flexibility and tolerance Answer: b. the technical knowledge of the tasks to be done 39. Unless an assignment is specifically intended to train an expatriate to assume greater management responsibilities, the most important criterion in selecting individuals for transfer to a foreign post typically is _____. a. flexibility and tolerance b. cognitive skills for understanding what is happening in the host society c. technical knowledge of the tasks to be done d. skills necessary for stress reduction and self-confidence Answer: c. technical knowledge of the tasks to be done 40. The most common reason executives are reluctant to accept the offer of an expatriate assignment is because _____. a. they usually earn lower salaries abroad than at home b. they would have to become citizens of the foreign country c. they believe that locals should fill local positions d. of a perceived negative effect on family lifestyle Answer: d. of a perceived negative effect on family lifestyle 41. Expatriate failure, defined in broad terms, refers to the _____. a. manager's planned return home due to adequate job performance b. managers' miscues, which give competitors a market advantage c. the unintentional dilution of the company's core competency d. the failure of the MNEs' selection policies to find individu¬als who will succeed abroad Answer: d. the failure of the MNEs' selection policies to find individu¬als who will succeed abroad 42. Perhaps the greatest cost of expatriate failure is _____. a. direct economic costs of time and money spent in selection b. the wasted effort of preliminary visits to the location before the executive moves c. the personal implications of professional failure to the executive's current self-confidence and future leadership potential d. the expatriate's lost productivity as things gradually fall apart Answer: c. the personal implications of professional failure to the executive's current self-confidence and future leadership potential 43. Research shows that a foreign assignment usually creates the greatest degree of stress in terms of _____. a. the family's adjustment to their new environment b. the expatriate maintaining career mobility c. meeting the company's performance expectations d. the financial hardship of moving to a new home Answer: a. the family's adjustment to their new environment 44. The disorientation and stress associated with being in a foreign environment is termed _____. a. uncertainty dislocation b. melancholy c. culture shock d. cultural transition Answer: c. culture shock 45. The most common predeparture training for an expatriate is _____. a. an informational briefing b. role playing c. in-depth cultural seminars d. language training Answer: a. an informational briefing 46. Practical predeparture training for the expatriate _____. a. is to foster an appreciation for the host country's culture b. aims to gradually familiarize the expatriate and family with the routines of life in the host country c. is profiles of political structures, job design, and compensation norms in the new market d. is ways to bypass the challenges of culture shock Answer: b. aims to gradually familiarize the expatriate and family with the routines of life in the host country 47. Traditionally, companies designed a predeparture training program to either transfer specific and specialized knowledge about the foreign environments or _____. a. provide unique advice on how to get past hostility of host nationals b. invest in ongoing executive mentor programs c. develop interpersonal awareness and adaptability in the context of intensive cultural sensitivity training d. do little to no training prior to their departure in the belief that a strong manager would figure it out Answer: c. develop interpersonal awareness and adaptability in the context of intensive cultural sensitivity training 48. Reasons for English becoming the international language of business include all of the following except _____. a. a high portion of global business is conducted among English-speaking countries b. English has become the world's major second language c. many managers do see language skills as important to their international career success d. agreement by the United Nations Center on Transnational Corporations to make English the legal language for MNE contracts abroad Answer: d. agreement by the United Nations Center on Transnational Corporations to make English the legal language for MNE contracts abroad 49. The _____ of compensation bases an expatriate's compensation on the prevailing pay scales in the locale of the foreign assignment. a. headquarters-based method b. home-based method c. culturally-based method d. host-based method Answer: d. host-based method 50. The _____ sets the expatriate's salary in terms of the salary of a comparable job in the city where the MNE has its headquarters. a. host-based method b. home-based method c. headquarters-based method d. culturally-based method Answer: c. headquarters-based method 51. Cost-of-living adjustments in foreign assignment _____. a. usually involve a compensation reduction because of lower costs abroad b. are due to the difficulty of duplicating a particular way of living abroad c. are usually eliminated over time d. increase the longer the individual is overseas Answer: b. are due to the difficulty of duplicating a particular way of living abroad 52. The _____ approach to expatriate compensation equalizes purchasing power across countries so employees can enjoy the same living standard in their foreign posting that they enjoyed at home. a. balance sheet b. equalization c. merit d. differential Answer: a. balance sheet 53. Historically, most international businesses have been more concerned with _____ than _____. a. selection; repatriation b. development; selection c. compensation; training d. leadership; training Answer: a. selection; repatriation 54. Which of the following is not an area in which repatriation strain is evident? a. change in personal finances b. readjustment to the home country corporate structure c. change in technical competence d. readjustment to life at home Answer: b. readjustment to the home country corporate structure 55. Problems with repatriation arise in any of the following general areas except _____. a. readjustment to the host country corporate culture b. personal finances c. readjustment to the home country corporate culture d. readjustment to life at home Answer: c. readjustment to the home country corporate culture 56. Problems often faced in repatriating an executive from foreign assignments to his or her home nation is that _____. a. there may not a good replacement in the foreign facility b. the firm must increase compensation substantially c. different departments compete excessively to hire the repatriated manager d. the returning expatriate has less social status and autonomy than when abroad Answer: d. the returning expatriate has less social status and autonomy than when abroad 57. An MNE facing a possible strike in one country is in a better position if _____. a. it has no excess capacity and has geographic diversification b. it has excess capacity and is not geographically diversified c. it has excess capacity in another country in which it produces the exact same product d. the union spans the entire industry and the MNE produces similar products elsewhere Answer: c. it has excess capacity in another country in which it produces the exact same product 58. A possible advantage of an MNE in dealing with labor is its _____. a. multidomestic product policies b. value activity switching c. rationalized production d. partnership arrangements with other companies Answer: b. value activity switching 59. The most common form of cooperation among unions in different countries is _____. a. information exchange b. lobbying governments c. simultaneous strikes d. voting blocs at the International Labour Organization Answer: a. information exchange 60. The work force composition in industrial countries has seen _____. a. a decreasing percent of young people enter the work force b. an increasing percent of jobs go to blue-collar workers c. decreasing job loss due to offshoring to emerging markets d. a continuing overall decline in union membershipage Answer: d. a continuing overall decline in union membershipage 61. Essentially, the task of HRM is the putting the right person into the right job in the right place at the right time for the right salary. Answer: True 62. The various activities of HRM, like discrete activities in the company's value chain, perform best when managers link them to the conditions in the markets in which the firm operates. Answer: False 63. There is a strong yet inconsistent relationship between the strategic performance of an MNE and the decision it has made in managing its human resources. Answer: False 64. Companies have found that superior human re¬sources are instrumental to improving its ability to create and sustain competitive advantage. Answer: True 65. Expatriates are locals from the country of the foreign subsidiary. Answer: True 66. An example of an expatriate would be a Canadian manager working for a Canadian firm in China. Answer: True 67. Growing pressures to quickly improve performance push companies to recruit people whose values and outlooks fit the needs of the chosen strategy. Answer: False 68. Although personal leadership, business skills, and technical competence are important, many executives see cultural sensitivity as vital to the success of a career in international business. Answer: False 69. Staffing policy is concerned with the selection of employees for particular jobs who command the technical skills required by the company's current strategy to create value. Answer: False 70. The ethnocentric and polycentric staffing policies, unlike the geocentric staffing policy, rely on extensive use of expatriate managers. Answer: False 71. The MNE that aims to control the transfer of its unique core competencies overseas usually prefers an ethnocentric staffing policy. Answer: True 72. Unlike the geocentric and polycentric mindsets, the ethnocentric mindset is not tied to a particular home or host nation. Answer: False 73. An executive with a polycentric staffing policy presumes that successful business practices at home need not change when transferred to foreign markets. Answer: False 74. A key disadvantage of a polycentric staffing policy is that it limits the career mobility of subsidiary executives. Answer: True 75. A geocentric staffing policy seeks the best qualified people for key jobs throughout the organization, irrespective of their nationality. Answer: True 76. A geocentric staffing policy is one in which all key management positions throughout the company's global operations are filled by host country nationals. Answer: False 77. An ethnocentric staffing policy is well matched with a multidomestic strategy. Answer: False 78. A polycentric staffing policy well matched with a transnational strategy. Answer: False 79. Historically, companies searching their ranks for potential expatriates looked first for individuals with the necessary language proficiency and, once acceptable, then evaluated their technical competence. Answer: False 80. Executives asked to accept an expatriate assignment most commonly decline the offer because they believe it will adversely affect their family's way of life. Answer: True 81. Expatriate failure that indicates there is a breakdown in how a company's selection policies identify and prepare individu¬als to staff its foreign operations. Answer: True 82. Failure rates for overseas postings fall typically between 30 and 50 percent, and usually reduce performance, sidetrack careers, and corrode morale. Answer: False 83. Upon selection of an executive for an expatriate posting, the most common predeparture training involves a range of instructive profiles of major aspects of the host country. Answer: True 84. Practical predeparture training for the expatriate is often geared toward developing his or her sensitivities to overcome culture fright. Answer: False 85. The headquarters-based compensation method bases the expatriate's compensation on the salary of a comparable job in the city where the MNE has its headquarters. Answer: True 86. A hardship allowance nullifies the risk that an expatriate will suffer a decline in his/her standard of living due to the exorbitant expense of a particular city. Answer: False 87. Historically, companies have not been particularly concerned with the challenge of repatriation in managing their international human resources. Answer: True 88. Studies of repatriated employees regularly report that most knew what their company position would be when they returned home but were uncertain about their likely new workplace practices. Answer: False 89. Union membership, although struggling in many wealthier countries, is growing in emerging markets. Answer: False 90. Critics of the labor practices of MNEs often note their aggressive use of value activity switching to exploit the rights of workers. Answer: True 91. Compare the differences among the ethnocentric, polycentric, and geocentric outlooks. Answer: a. Ethnocentric mindset—Ethnocentrism is the belief that the values, practices, and behaviors of one's home country are intrinsically superior to those in other nations. An executive with an ethnocentric mindset believes that successful business practices at home need not change when transferred to foreign markets. Instead, he assumes that if his business design has already proven successful at home, then it will work anywhere in the world. b. Polycentric mindset—A polycentric outlook accepts the importance of adapting to differences, real or imaginary, between the home and host country. A polycentric manager champions the ways of foreign markets as comparable, if not more enlightened, than the practices of his or her parent company and home nation. To a lesser degree, one sees this philosophy in the notion of "When in Rome, do as the Romans do." c. Geocentric mindset—Unlike the ethnocentric and polycentric mindset, the geocentric mindset is not tied to a particular home or host nation. Geocentricism holds that all nations have inalienable traits that are neither superior nor inferior, but simply there. A geocentric manager provides a universal solution to every problem or perfect explanation for every action. 92. Discuss some of the reasons for using expatriates. Answer: Although expatriate managers comprise a minority of total managers within MNEs, companies employ expatriates because of their competence to fill positions, their need to gain foreign experience, and their ability to control operations according to headquarters' preferences. Companies use expatriate managers when they cannot find qualified local candidates. MNEs use home country expatriates to control foreign operations because they are used to doing things the headquarters way. 93. Discuss the reasons for staffing with locals. Answer: The most common reason managers reject a foreign assignment is their perception that the assignment will have a negative effect on their family's lifestyle because of unacceptable living conditions, inadequate educational opportunities for their children, and the inability to be near aging parents. There are also legal impediments to staffing with expatriates, such as licensing requirements that prevent companies from using expatriate accountants and lawyers. The greater the need for local adaptations, the more advantageous it is for companies to use local managers, as they presumably understand local conditions better than expatriates would. When the host country feels animosity toward foreign-controlled operations, local managers may be perceived locally as "better citizens" because they presumably put local interests ahead of the company's global objectives. This local image may play a role in employee morale as well, because many subsidiary employees prefer to work for someone from their own country. Finally, a reason for staffing with locals is that they usually cost less. Companies must pay moving expenses for expatriates as well as salary adjustments for their move to foreign countries. 94. What individual characteristics and qualifications should a company consider when choosing managerial candidates for foreign assignments? Answer: a. Technical competence—Corporate decision-makers, expatriate managers, and local managers concur that technical competence, usually indicated by past domestic or foreign job performance, is the largest determinant of success in foreign assignments. b. Adaptiveness—Although some companies rely only on technical competence to select expatriates, three types of adaptive characteristics are important for an expatriate's success when entering a new culture: • the need for self-maintenance, such as being self-confident and able to reduce stress • those related to the development of satisfactory relationships with host nationals, such as flexibility and tolerance • cognitive skills that help one to perceive correctly what is occurring with the host society An expatriate who lacks these may be unable to function effectively. Unfortunately, companies cannot always assess these adaptability characteristics accurately. If the expatriate cannot adapt, he or she may leave the foreign assignment, either by choice or by company decision. c. Local acceptance—Expatriates may encounter some acceptance problems regardless of who they are. Local employees may feel that the best jobs go to overpaid foreigners, especially because companies sometimes send managers abroad to reward or find a place for them, rather than for what they can contribute effectively. Expatriates may have to make unpopular decisions to meet global objectives, or local management may have had experiences with expatriates who made short-term decisions and then left before dealing with the longer-term implications. If negative stereotypes are added to these attitudes, the expatriate may find it very difficult to succeed. 95. Discuss the principal reasons why people decline expatriate positions. Answer: a. Family—Most often, managers reject a foreign assignment given their belief that it will impair their family's lifestyle due to inferior living conditions, inadequate educational opportunities for their children, and the inability to be near aged parents. b. Career concerns—A foreign assignment may take the manager outside the corporate mainstream for advancement, thereby actually slowing his or her career trajectory. c. Legal barriers—Governments often prohibit or restrict the use of expatriates. Less dramatically, national licensing requirements prevent companies from using expatriate accountants and lawyers. d. Spouse issues—Spouses rarely get a permit to work in a comparable job abroad. If the couple is unmarried, the "significant other" may be unable to get permission to live in the foreign location. e. Travel fatigue—The fatigue of executive travel may also cause emotional anxiety, physical illness, and subpar professional performance. f. Location disapproval—The political, cultural, religious, and security characteristics of some nations inspire little or no interest. 96. List and discuss the main components of an expatriate's compensation package. Answer: a. Base salary—An expatriate's base salary normally falls in the same range as the base salary for the comparable job in the home country. b. Foreign-service premium—MNEs often award expatriates foreign-service premiums for accepting a foreign assignment. Generally, most premiums range from 10 to 30 percent, after taxes, of the expatriate's base salary. c. Extraordinary allowances—Often included in an expatriate's compensation package is extra pay to cover the peculiar burdens of a foreign assignment. For example, an expatriate earns a hardship allowance when sent to a particularly difficult environment or dangerous location. d. Fringe benefits—Firms typically provide expatriates the same level of medical and retirement benefits abroad that they received at home, rather than those customarily granted in the host country. However, most companies expand these benefits to deal with local contingencies. e. Taxation—If there is no reciprocal tax treaty between the expatriate's home country and host country, then he or she may be legally obligated to pay income tax to both governments. In such situations, the MNE ordinarily pays the expatriate's tax bill in the host country. 97. List and discuss the three common methods of implementing a balance compensation plan. Answer: a. Home-based method—This method bases the expatriate's compensation on the salary of a comparable job in his or her home city. This method, by preserving equity with home country colleagues, treats the expatriate's compensation as if the person had never left home. The home-based method is the most prevalent expatriate compensation plan. b. Headquarters-based method—This method sets the expatriate's salary in terms of the salary of a comparable job in the city where the MNE has its headquarters. This plan explicitly recognizes the disruption of a foreign assignment and goes to great lengths to make sure an expatriate lives like she had in her home country. c. Host-based method—This method is sometimes called destination pricing and localization and bases an expatriate's compensation on the prevailing pay scales in the locale of the foreign assignment. Essentially, it pays an expatriate less in order to reduce tension between the expatriate and his or her colleagues in the host country. 98. What problems do managers commonly encounter when repatriated from foreign assignments? How can companies deal with these problems? Answer: Up to one-third of returning expatriates leave their companies within one year of repatriation. Problems with repatriation arise in three general areas: personal finances, readjustment to home country corporate structure, and readjustment to life at home. Companies give expatriates many financial benefits to encourage them to accept a foreign assignment. Returning expatriates often find that many of their peers were promoted above them while they were abroad, that they now have less autonomy in the job, and that they now have less in common with their friends than before the foreign assignment(s). Some human resource practices for smoothing reentry include providing expatriates with ample advance notice of when they will return, maximum information about their new jobs, placement in jobs that will build on their foreign experiences, housing assistance, and a reorientation program, as well as requiring frequent visits to headquarters and using a formal headquarters mentor to look after their interests while they are abroad. 99. Explain the different attitudes held by workers in different nations about unions, collective bargaining, and expectations. Answer: The amount of compensation that companies pay depends on workers' contributions to the business, supply of and demand for particular skills in the area, cost of living, government legislation, and collective-bargaining ability. Companies' methods of payment depend on customs, feelings of security, taxes, and governmental requirements. Both the amount and method of payment are affected by a country's culture. MNEs usually pay slightly better than their local counterparts in lower-wage countries, although they still pay less than what they do in higher-wage countries. They pay more because of their management philosophies and structures. An MNE's typical management philosophy, particularly in contrast to that of a local, family-run company, is often to attract high-level workers by offering relatively higher wages. In addition, its product and process technologies may allow it to compensate employees more than local companies do. Further, when a company first comes into a country, experienced workers may demand higher compensation because they have doubts about whether the new operation will succeed. 100. How have labor groups sought to counter the advantages the MNEs might have over labor? Answer: a. Information sharing—The most common international cooperation among unions is exchanging information, which helps them refute company claims as well as cite precedents from other countries on bargaining issues. b. Assistance to foreign bargaining units—Labor groups in one country may support their counterparts in other countries by refusing to work overtime to supply a market normally served by striking workers' production, sending financial aid to workers in other countries, and disrupting work in their own countries. c. Simultaneous actions—There have been a few examples of simultaneous negotiations and strikes. But labor's cooperation across borders is a problem because of national differences in union structures and what workers want. Test Bank for International Business: Environments and Operations John D. Daniels, Lee H. Radebaugh, Daniel P. Sullivan 9780131869424, 9780201846188, 9780130308016, 9780201566260, 9780201107135, 9780132668668
