Exporting and Trading info

CASE THE OFFICE EQUIPMENT COMPANY In 1992 the Office Equipment Company (OEC) had to replace its manager in San Salvador, El Salvador, because the present managing director (a U.S. national) announced suddenly that he would leave within one month. OEC manufactured a wide variety of small office equipment (such as copying machines, recording machines, mail scales, paper shredders) in eight different countries that was distributed and sold worldwide. OEC had no manufacturing facilities in El Salvador (see Map 21.1) but had been selling and servicing there since the early 1970s. OEC had first tried selling in El Salvador through independent importers but quickly became convinced that it needed to have its own staff there to make sufficient sales. Despite political turmoil, which over the last few years had bordered on being a full-scale civil war, OEC's operation in El Salvador (with about 100 employees) had enjoyed good and improving sales and profitability. OEC was in the proces...

As capital and technology continually become more mobile, from one country to another and from one firm to another, human re-| source development should account increasingly for competitive differences. |   Consequently, the access to and retention of ever more qualified personnel should gain in importance. This does not imply a lack of employee mobility. In fact, the high-skill, high-value worker will likely be more difficult to retain in the future.71 From a managerial standpoint, a challenge will be to break down nationalistic barriers that impair the achievement of global corporate cultures and integrated global strategies. To accomplish these ends, more cross-national interchange will be necessary. The traditional problems of cost and governmental regulations will likely continue to impede these interchanges; however, those causes are not likely to become more acute in the future. Personal adaptation will, however, likely be an even greater problem. The head of internation...

MULTINATIONAL OWNERSHIP AND COLLECTIVE BARGAINING MNE Advantages Job Security It is often argued that, when the number of jobs is not growing, workers are concerned about employment stability rather than other work conditions. If MNEs have exported jobs from industrialized countries, then it should follow that labor demands in those countries have been tempered in the process. Yet it is difficult to conclude whether MNEs have increased or decreased home-country employment by making direct investments abroad. The composition of work forces in industrial countries has moved more toward white-collar than blue-collar jobs. Although some of this internal realignment in work-force composition may be inevitable with or without MNE activities, the result is nevertheless a shrinking of traditional bargaining units made up of blue-collar workers.65 The white-collar workers have been less prone to join unions in the United States than they have in other industrial countries. But even when the...

INTERNATIONAL PRESSURES ON NATIONAL PRACTICES In 1919 the International Labor Organization (ILO) was set up on the premise that the failure of any nation to adopt humane conditions of labor is an obstacle in the way of other nations that desire to improve .conditions in their own countries. There are also several associations of unions from different countries, which support similar ideals. They include various international trade secretariats representing workers in specific industries; the International Confederation of Free Trade Unions (ICFTU), the World Federation of Trade Unions (WFTU), and the World Confederation of Labour (WCL).62 Through these organizations' activities and the general enhancement of communications globally, people increasingly are aware of differences in labor conditions among countries. Among the newsworthy reports have been legal proscriptions against collective bargaining in Malaysia and wages below minimum standards in Indonesia. The ILO also brough...

COMPARATIVE LABOR RELATIONS In each country where an MNE operates, it must deal with a group of workers whose approach will be affected by the sociopolitical environment of the country and by the traditions and regulations of collective bargaining. Sociopolitical Environment There are striking international differences in how labor and management view each other. When there is very little mobility between the two groups, there may be little direct cooperation toward reaching an overall corporate objective. This type of separation may be enhanced if a marked class difference exists between management and labor. Certainly, much labor strife may be traced to labor's and management's perceived involvement in a class struggle, even though labor may have been gaining a greater share of total income and wealth for some time. In such countries as the United States, Brazil, and Switzerland, labor demands are largely met through an adversary process between the directly affected man...

LABOR COMPENSATION Importance of Differences Compensation policies and practices directly affect a firm's competitive viability because they influence the competitive ingredient of attracting, maintaining, and motivating personnel. Labor cost differences among countries sometimes lead to competitive advantages and motivate many firms to establish foreign production facilities. The amount of compensation people receive depends on the estimated contributions made to the business, supply and demand ("going wage") for particular skills in the area, cost of living, governmental legislation, and collective-bargaining ability. The methods of payment (salaries, wages, commissions, bonuses, and fringe benefits) depend on customs, feelings of security, taxes, and governmental requirements.  International firms usually pay slightly better than their local counter-     parts m tjje lower-wage countries, but far below the salary paid for similar  „  J°bs in the highes...

LABOR MARKET DIFFERENCES! External Reference Points Typically, a company setting up a new operation in a foreign country is duplicating, perhaps on a small or slightly altered scale, a product, process, or function being performed at home. Past experience will have shown company officials what type and how many employees are needed for the size of operation being built. The company will probably have job descriptions for each category to be filled, and from past experience will know what types of people ideally fit into specific positions. Appropriate Technology There is some danger in a firm's attempting to duplicate organizational structures and job descriptions abroad, particularly in LDCs. For one thing, labor-saving devices that are economically justifiable at home, where wage rates are high, may be more costly than labor-intensive types of production in a country with high unemployment rates and low wages. Labor-intensive methods also may ingratiate the firm with governm...

MANAGEMENT TRAINING Internationalizing the Organization Preemployment Training In spite of a lessening need worldwide to con- vince managers of the advantages of taking an international perspective on business, there is still a need to train managers in business operating differ- ences brought about by internationalization. Business schools are increasing their international offerings and requirements, but there is no consensus as to what students should learn to help prepare for international responsibilities. Two distinct approaches are (1) the conveying of knowledge specific to foreign environments and in area studies, and (2) training in interpersonal awareness and adaptability. For example, the former may tend to remove some of the fear and aggression that are aroused when dealing with the unknown. However, the understanding of a different culture does not necessarily imply a willingness to adapt to that culture. Although either approach generally helps a person adjust relativ...

MANAGEMENT RECRUITMENT AND SELECTION College Recruitment International companies recruit through universities at home and abroad to find capable nationals of the countries where they have foreign facilities. This method has some drawbacks since the most acute personnel shortage in foreign facilities is for people who already have considerable experience. As the new hires gain experience, however, they may eventually move into higher-level management positions, thus decreasing the need for expatriates. These same firms also recruit home-country nationals, usually to work in their domestic operations until they have gained technical experience and know the corporate culture. Management Inventories Some companies have centralized personnel record systems, which include home- and foreign-country nationals. These include not only the normal technical and demographic data, but also such adaptive information as foreign-language abilities, willingness to accept foreign assignments, and re...

FOREIGN MANAGERIAL TRANSFERS Some Definitions International firms commonly categorize managers as locals (citizens of the countries where they are working) or expatriates (noncitizens). The expatriate group is further categorized as home-country and third-country nationals. These are, respectively, citizens of the country where the company is headquartered and citizens neither of the country where they are working nor of the headquarters country of the firm. Locals or expatriates may be employed in the firm's home country or in the firm's foreign operations. Expatriates: A Minority of Managers Most managerial positions are filled by locals rather than expatriates in both headquarters or foreign subsidiary operations. The one exception is for project management in some developing countries, such as Saudi Arabia, where there is an acute shortage of qualified local candidates. 2010 put Spanish clearly in front with 44 percent of responses. Japanese followed at 33 percent. Th...

MANAGEMENT QUALIFICATIONS AND CHARACTERISTICS Headquarters-Subsidiary Relationship International management staffing is two-tiered: First, the subsidiary level must employ persons who are equipped to manage the activities within the countries where they are located; second, people at corporate and/or regional headquarters must be equipped to coordinate and control the firms' various worldwide and regional operations. These two staffing dimensions are very much related, particularly since headquarters personnel usually choose and evaluate those who direct the subsidiaries abroad. These concerns also are related in that headquarters and subsidiary personnel must both be suf- nciently aware of and willing to accept trade-offs between the need to adapt to local environmental differences and the need to gain global efficiencies. The balance of power in these trade-offs is complex, depending on such factors as the firm's philosophy (e.g., polycentric versus ethnocentric) and on...

INTRODUCTION The preceding case highlights one firm's experience in dealing with some international aspects of its personnel policies, an experience that is more comprehensive than one finds within most other firms operating internationally.2 Although companies have taken a variety of approaches to international human resource management, most agree on the importance of qualified personnel if they are to achieve their foreign growth and operation objectives. For instance, the Conference Board held a roundtable discussion of chief executives on how the world is changing and what, if anything, managements can do to keep change under control. The chairman of Unilever said, "The single most important issue for us has been, and will continue to be, organization and people."3 The need for highly qualified people to staff the organization cannot be overemphasized. Any company must determine its personnel needs, hire people to meet those needs, motivate them to perform well, an...

Bulgarian-born Frank P. Popoff became chief operating officer of U.S.-based Dow Chemical in 1987 when he replaced Italian-born Paul Oreffice, who became chairman of the board. Oreffice had replaced Hungarian-born Zoltan Merszei in 1979. On becoming chief of Dow, Mr. Popoff, who had once headed Dow's European division, said, "I had a lot of international experience and I think, for a company that has over 50 percent of its sales outside the U.S., that's very important." As of 1990 Dow's 22-member management committee at the top of the company included 10 who were non-U.S. born and 17 with foreign experience. This placement of foreign-born and/or internationally experienced persons at the helm of the firm might suggest the process of multinationaliza-tion. For example, Peter Drucker, a leading management authority, stated that a truly multinational firm "demands of its management people that they think and act as international businessmen in a world in which ...