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GROUP

5:

Introduction
Chicago Food & Beverage Company was established in Chicago in 1963. It produces fruit jams, canned fish, meat, vegetables, and non-alcoholic beverages. non It became the fifth largest American producer in the food and beverage sector in 1985. Foreign expansion plans started at the beginning of 1985 with the new CEO Mr. Bill Stevens.

Topic 1: Question 1 Internationalization strategies


Multi domestic

Transnational

International

Global

Topic 1: Question 1 Internationalization strategies


Multi domestic or localization strategy: customizing the firm s goods/services to tastes and preferences in different national markets. Global strategy: reduction of cost that comes from economies of scale, learning effects, and location economies. Transnational strategy: hybrid of multi domestic and global strategies; retaining of central control of operations and responsiveness to local needs. International strategy: products which designed with domestic market in mind are sold internationally with minimal localization.

Topic 1: Question 1 Internationalization strategies


Between 1985 & 1990 acquired 3 local enterprises in Belgium, France and Germany. In 1991 the first Joint Venture in Singapore. In 1995 the second Joint Venture in Hong Kong. In 1998 the third Joint Venture in Haiphong. Each joint venture produces its own products which are distributed within the local market. Subsidiaries are entirely independent from each other. Multi domestic/localization strategy!!!

Topic 1: Question 1 Internationalization strategies


In 2000 regrouping into 3 regions: USA with its center in Chicago; Europe with its center in Brussels; Asia in Singapore. Certain products will be produced by certain subsidiaries for others. Characteristics of Global strategy!! Subsidiaries continue producing local specialties though they are dependent on certain products from other subsidiaries. Transnational strategy!!!

Topic 1: Question 2 HRM orientation, comments & recommendations

Ethnocentric Polycentric Geocentric Regiocentric

Topic 1: Question 2 HRM orientation, comments & recommendations

CFB employed 25 American expatriates. Head office recruits expatriates for subsidiaries. Ethnocentric orientation!!!

Topic 1: Question 2 HRM orientation, comments & recommendations

Problems: Expatriate managers may experience adjustment problems Expatriate managers may attempt to impose styles which are appropriate at the organization s headquarters but which may be deemed inappropriate in the host country

Topic 1: Question 2 HRM orientation, comments & recommendations

Develop regiocentric approach! Hire managers within the region of the business or locally since they are aware of culture and hence better understand and influence employees! Let regional branches take decisions for themselves rather than head quarters!

Topic 2: Question 1 Paul Fierman as an expatriate manager

1995 Bachelor s Degree in Marketing 1995 Product vice-manager with CFB. 1998 Regional product manager 2000 Country brand manager 2002-2004 MBA in International Management 2004 Expatiation to Haiphong.

Topic 2: Question 1 Paul Fierman as an expatriate manager


The only international experience he had was a year in Oxford, Great Britain. No deep research on the country. 3 books about Vietnam are outdated. Lack of communication with HQ. 3 hour meeting with Robert Greenberg. Too much interest in financial side of assignment. Unhappy spouse. Bad management of local employees. Lack of adaptation and flexibility.

Topic 2: Question 1 Paul Fierman as an expatriate manager


Company s fault: hasty recruitment lack of communication with Paul lack of training programs

Topic 2: Question 2 Expatriate management & recruitment

Expatriate selection. Training and management development Repatriation of expatriates Performance appraisal Payment for expatriates

Topic 2: Question 2 Expatriate selection problems: - tendency to equate performance in homecountry with overseas; - primary focus on technical skills; - ignoring of international experience and adaptability skills

Topic 2: Question 2 Expatriate management & recruitment


Expatriate selection: HR should select the appropriate candidates for expat assignment. For senior position it is wisely to hire staff with extensive international experience rather than with proper technical skills, particularly in the country where the post is to be held. The characteristics of ideal candidate for expatriation: - high self-esteem and self-confidence; - good communication skills; - desire to learn a foreign language; - high adaptability - ability to empathize with people of other cultures

Topic 2: Question 2 Expatriate management & recruitment


Training and management development Company should provide training as for the expatriate as well for his/her spouse on assignment and culture of the country where the assignment will take place. Training on development of managerial skills. Company should create adaptation policy.

Topic 2: Question 2 Expatriate management & recruitment


Repatriation of expatriates Company should develop programs on repatriation for expatriate managers in order to prepare them for reentry into their homecountry: - changes in their physical and professional landscapes; - encourage expats to use their knowledge and experience which they got abroad.

Topic 2: Question 2 Expatriate management & recruitment


Performance appraisal On-site manager s appraisal. Evaluation should be made by the same nationality as the expatriate and by the former expatriate. Home-office managers should be consulted.

Topic 3: Question 1 Expatriate compensation methods


Balance sheet Negotiation Localization Cafeteria plans

Topic 3: Question 1 Expatriate compensation methods Balance sheet approach

The balance sheet approach The Balance Sheet is an approach originally designed by Mercer the basic objective of which is maintenance of home-country living standard plus financial inducement: - foreign service premium; - allowances e.g. hardship allowance, housing allowance, cost-of-living allowance, education allowance. - return ticket to home country paid; - life insurance in countries which are under war.

Topic 3: Question 1 Expatriate compensation methods Balance sheet approach Advantages


Equity between assignments & expatriates of the same nationality; Facilitates international mobility; Easy to communicate to employees.

Disadvantages Can result in great disparities between expatriates of different nationalities & local nationals; Difficult to manage as requires a lot of information on cost of living index, taxation system and salary comparison.

Topic 3: Question 1 Expatriate compensation methods Negotiation approach

The negotiation method The employer and employee simply negotiate the package of compensation.

Topic 3: Question 1 Expatriate compensation methods Negotiation approach Advantages Effective in case the company has a small number of expatriates. Disadvantages Relatively costly Creates comparability problems between various expatriates.

Topic 3: Question 1 Expatriate compensation methods Localization approach

Localization approach: It is based on the host country s salary and it is easy to see the different salaries of the same position in the different countries.

Topic 3: Question 1 Expatriate compensation methods Localization approach Advantages Equity between local nationalities salaries and expatriates; Easy to administer Disadvantages Need for negotiating supplements; Less attractive if salary in host country is much bigger than salary in overseas country.

Topic 3: Question 1 Expatriate compensation methods Cafeteria approach

The cafeteria approach individualizing of each expat s benefit plans; the employer gives each employee a benefits fund budget, and lets the person spend it on the benefits he/she prefers, subject to two constraints; 1st, the employer must limit the total cost for each employee s benefits package. 2nd, each employee s benefits plan must include certain required items for example, Social Security workers compensation and unemployment insurance.

Topic 3: Question 1 Expatriate compensation methods Cafeteria approach Advantages Allows employee to choose the benefits he/she needs; Flexible Disadvantages Employees can make bad choices Administrative costs can be high

Topic 3: Question 1 Expatriate compensation methods


From 1985 till 2002 CFB used negotiation method. In 2002 HR introduced mixed compensation method which is based on different salaries for junior and senior managers. More than 6 years of international experience international method; Less than 6 years home country method.

Topic 3: Question 2 Suggestions on Expatriate compensation methods

HR management should clearly communicate the compensation package to each expatriate. The basic salary should be based on experience and skills of the expatriate. The benefits should be the same for all. The package offered should be the same for expatriates from the different countries but with the same background.