Exam 3: Chapters 9-11

Answer all of the four questions (5 points each). Lay out your answers using numbers, letters, or bullet format as necessary. Be sure to give full, comprehensive answers with enough detail to convince the reader that you understand the concepts. Be sure that your answer demonstrates knowledge and understanding of the course and text. Use subheadings and bulleted lists as appropriate. 1. a) Compare the advantages of the ethnocentric, polycentric, and global approaches to staffing international operations. (Chapter 9, pages 343-345) Advantages of the ethnocentric staffing approach: PCNs are familiar with company goals, products, technology policies and procedures and they know how to get things done through the company headquarters. PCNs also tend to be more loyal to the company than are local managers. Advantages of the Polycentric staffing approach: HCNs are more familiar with local conditions and culture and know the local ways of doing business. They have important contacts and are more likely to be accepted by people inside and outside the organization. In terms of cost, they will cost much less to hire than PCNs. Advantages of the global staffing approach: This approach provides a greater pool of qualified and willing candidates to choose from. It also results a culturally adept and more flexible global management cadre who may have bilingual or multi-lingual skills. It may also be more cost effective to use transpatriates instead of expatriates. b) What are the factors that will affect your choice of staffing? (Chapter 9, pages. 343-345) Ethnocentric Staffing Approach (PCN): Cost of salary and benefits, hardship package, level of technical capability required, close contact with head office required as in the initial stages of set up, would be factors that will influence selection of ethnocentric staffing approach. Polycentric Staffing Approach (HCN): How much local customs and culture matter in the product or industry, whether local government requirements have to be met, whether there is availability of skilled labor force in the country, and whether autonomy can be granted from head office- are all factors to be considered in selection of the polycentric staffing approach. Global Staffing Approach (TCN): Availability of skilled personnel, high level of flexibility and cultural adaptability is required and the whether best

200

person irrespective of nationality needs to be chosen, are factors to be considered in the selection of global staffing approach. 2. List five of the primary reasons for expatriate failure, along with solutions for each to increase the likelihood of success of the expatriates assignment: (Chapter 9, pages 348-349) Reason for Expatriate failure 1. Inadequate preparation, training, and orientation prior to assignment Solution Extensive preparation and training for cross-cultural interactions is critical. Area studies, culture assimilators, language and sensitivity training and field experiences are all required Keeping in constant touch with expatriate and providing support Consult and interview spouse before assignment Let spouse initiate own training program Provide language and culture training to spouse and family Use balance sheet approach for compensation Keep expatriate whole Have a long range career plan for executive, such that he knows even before he leaves where he is likely to be posted upon return. Provide ongoing support to expatriate while he is on assignment abroad.

2. Alienation and lack of support from headquarters 3. Problems with spouse and childrenfamily adjustment problems

4. Insufficient compensation and financial support 5. Poor programs for career support and repatriation

3. Discuss Germanys labor relations system, including the codetermination law, and the role of works councils. What are the implications for firms such as DaimlerChrysler, A.G.? What effect is globalization having on codetermination? (Chapter 10, page 390-391)

201

Germanys codetermination law (mitbestimmung)which refers to the participation of labor in the management of a firmmandates representation for unions and salaried employees on the supervisory boards of all large companies and works councils of employees at every work site. Unions are well integrated into managerial decision-making and can make a positive contribution to corporate competitiveness and restructuring. Union membership in Germany is voluntary, usually with one union for each major industry, and union power is quite strong. Negotiated contracts with firms by the employers federation stand to be accepted by firms who are members of the federation, or used as a guide for other firms. These contracts, therefore, result in setting the pay scale for about 90 percent of the countrys workers. The union works councils play an active role in hiring, firing, and reassignment during times of reorganization and change. Codetermination has clearly helped modify the German managerial style, from authoritarian to something more akin to humanitarian, without altering its capacity for efficiency and effectiveness. This system compares to the lack of integration and active roles for unions in the U.S. auto industry, for example, conditions that limit opportunities for change. DaimlerChrysler, the German-American company headquartered in Germany, includes a works council in its decision-making, as mandated by German law. This means that the companys labor representatives pay close attention to U.S. attitudes, which may lead to changes in the tone of the collective bargaining processes. The two-tiered system of a supervisory and a management board remains. DaimlerChrysler was one of several companies to exert pressure in 2004 to bring down the high labor costs and taxes in Germany, under the threat of moving its plants elsewhere to remain globally competitive. Pay for German production workers has been among the highest in the world, about 150 percent of that in the United States and about ten times that in Mexico. German workers also have the highest number of paid vacation days in the world and prefer short workdays. In July 2004, however, Jurgen Peters, chairman of Germanys powerful IG Metall engineering trade union, announced the agreement with DaimlerChrysler to accept smaller raises and increased working hours, after the company threatened to move 6,000 jobs elsewhere. The codetermination law is, however, coming under pressure as a result of globalization. German firms, in order to remain more competitive against foreign firms, need unions to make more concessions. Under pressure from globalization, German unions have incurred large membership losses. As a result, they are now more willing to make concessions. For example, the German firm Linde decided to build a factory in Eastern Europe to take advantage of lower wages. Linde reversed the decision, however, after the IG

202

Metall trade union decided to match the savings by working longer hours and taking less pay. 4. Describe the prevailing motivational climate in Eastern Europe with special reference to Russia. As part of your answer, discuss the conflicting motivational techniques used by Western vs. Russian managers with Russian employees. (Chapter 11, page 409) Western firms entering Eastern European markets should realize that workers are accustomed to working under very different circumstances and being motivated in different ways. Specific examples (based on Russia) are found in a study by Michailova. This study found that: Russian employees are still used to a management style that prevailed in a centrally planned economic system The centrally planned system resulted in vertical hierarchies and little individualism Employees were more motivated by authoritarianism of their Russian managers than by empowerment by Western managers

Some conflicting motivational techniques found by Michailova are given below: Western managers told their Russian employees to: Take the initiative and give suggestions Learn from mistakes and dont repeat them Look longer term and to the future Think of the company as an integrated entity Russian managers told their Russian employees: Obey the rules: just do what you are supposed to do Mistakes are not allowed and will be punished Concentrate on the here and now Act according to your job description and dont be concerned about other peoples jobs

203