Chapter 20: International Human Resource Management and Labor Relations

1. Human Resource Management (HRM)

Set of activities directed at attracting, developing, and maintaining the effective workforce necessary to achieve a firm’s objective

Differences in culture, levels of economic development, and legal systems among countries may force changes in HRM systems

2. The International Human Resource Management Process

HRM’s Strategic Content

Recruitment and Selection

Training and Development

Performance Appraisal

Compensation and Benefits

Labor Relations

Contribution to Organizational Effectiveness

3. International Managerial Staffing Needs

Staffing Issues

1. Recruiting
2. Training
3. Retaining

Staffing Categories

4. Managerial and Executive Employees
5. Non-managerial Employees

4. Scope of Internationalization

Size of staffing tasks depends on scope of firm’s international involvement

1. Export department
2. International division
3. Global organization

5. Centralization versus Decentralization
   of Control

Centralized firms

1. Favor home country managers
2. Most common amongst international division form

Decentralized firms

3. Favor host country managers
4. Most common amongst multidomestic firms

6. Staffing Philosophy

- Parent Country Nationals (PCNs)

- Host Country Nationals (HCNs)

- Third Country Nationals (TCNs)

7. Strategies for Staffing

- Ethnocentric staffing model

- Polycentric staffing model

- Geocentric staffing model

8. Necessary Skills and Abilities for International Managers

Improved Chances of Succeeding in An International Job Assignment :

v Skills and Abilities Necessary to Do The Job

- Technical

- Functional

- Managerial

v Skills and Abilities Necessary to Work In a Foreign Location

o Adaptability

o Location-specific skills

o Personal characteristics

9. Recruitment

- Experienced Managers

- Younger Managers

10. Managerial Selection

- Managerial competence

- Appropriate training

- Adaptability to new situations

11. Culture Shock

Psychological phenomenon that may lead to feelings of fear, helplessness, irritability, and disorientation

12. Phases in Acculturation

Honeymoon

Disillusionment

Adaptation

Biculturalism

13. Training and Development

Assessing training needs

Basic training methods

1. Standardized
2. Customized

Developing younger managers

14. Performance Appraisal

Process of assessing how effectively people are performing their jobs

Purpose

1. To provide feedback to individuals about how well they are doing
2. To provide a basis for rewarding top performers
3. To identify areas in which additional training and development may be needed
4. To identify problem areas that may call for a change in assignment

15. Compensation Packages

Include salary and nonsalary items

Determined by

1. Labor market forces
2. Occupational status
3. Professional licensing requirements
4. Standards of living
5. Government regulations
6. Tax codes

16. Differential Compensation

Cost-of-living allowance

Hardship premium or foreign-service premium

Tax equalization system

17. Labor Relations

- Labor relations in a host country often reflects laws, culture, social structure, and economic conditions

- Union membership may be high

Chapter 18: International Financial Management

1. Financial Issues in International Trade

- Which currency to use for the transaction

- When and how to check credit

- Which form of payment to use

- How to arrange financing

2. Method of Payment

- Payment in advance

- Open account

- Documentary collection

- Letters of credit

- Credit cards

- Countertrade

3. Forms of Drafts

Sight draft: requires payment upon transfer of title to the goods from the exporter to the importer

Time draft: extends credit to the importer by requiring payment at some specified time

1. Date draft: specifies particular date

4. Documentation for Letters of Credit

- Export licenses

- Certificates of product origin

- Inspection certificates

5. Types of Letters of Credit

- Advised letter of credit

- Confirmed letter of credit

- Irrevocable letter of credit

- Revocable letter of credit

6. Foreign-Exchange Exposure

- Transaction exposure

- Translation exposure

- Economic exposure

7. Management of Working Capital

Corporate Financial Goals

1. Minimizing working-capital balances
2. Minimizing currency conversion costs
3. Minimizing foreign-exchange risk

8. Evaluating Investment Projects

- Net Present Value

- Internal Rate of Return

- Payback period

Chapter 17: International Operations Management

1. International Operations Management

Operations Management: the set of activities an organization uses to transform different kinds of inputs into final goods and services

International Operations Management: the transformation-related activities of an international

2. The International Operations Management Process

Strategic Context

• Differentiation

• Cost leadership

• Focus

Standardized vs. Customized

Production

Acquisition of

Resources

• Supply Chain

• Management

• Vertical Integration

• Make-or-buy decision

Location Decisions

• Country-related issues

• Product-related issues

• Government policies

• Organizational issues

Logistics and

Materials

Management

• Flow of materials

• Transportation options

• Inventory levels

• Packaging

3. Complexities of International Operations Management

- Resources

- Location

- Logistics

4. Basic Make-or-Buy Options and Influence Factors for it

5. Competitive Advantage versus Strategic Vulnerability in the Make-or-Buy Decisions

6. Factors affecting Location Decisions

- Country-Related Issues

- Product-Related Issues

- Government Policies

- Organizational Issues

7. Country-Related Issues

- Resource availability

- Cost

- Infrastructure

- Country-of-origin effects

8. Product-Related Issues

- Value-to-weight ratio

- Technology

- Importance of customer feedback

9. Government Policies

o Stability of political process

o National trade policies

o Economic development incentives

o Existence of foreign trade zones (FTZ)

10. Organizational Issues

- Business strategy

1. Cost leadership
2. Differentiation

- Organizational structure

- Inventory management policies

3. Just-in-time (JIT) inventory management system

11. International Logistics and
    Materials Management

International logistics: management of the

1. flow of materials, parts, supplies, and other resource from suppliers to the firm
2. flow of materials, parts, supplies, and other resources within and between units of the firm itself
3. flow of finished products, services, goods from the firm to customers

12. Differences in Domestic and International Materials Management

- Distance involved in shipping

- Number of transport modes

- Complexity of regulatory context

13. International Service Operations

International Service Business: firm that transforms resources into an intangible output that creates utility for its customers

14. Productivity

Economic measure of efficiency that summarizes the value of outputs relative to the value of inputs used to create the outputs

1. Helps to determine firm’s overall success
2. Contributes to long-term survival
3. Contributes to overall standard of living

15. Strategies for Enhancing Productivity

- Spend more on research and development

- Improve operations

- Increase employee involvement

16. Managing Quality in
    International Business

· Quality: totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs

1. American Society for Quality Control

· ISO 9000: 2000

2. International set of quality guidelines
3. Basis for quality certification
4. International Organization for Standardization

17. The Essential Components of Total Quality Management

Strategic Commitment To Quality :

- Employee Involvement

- High Quality Materials

- Up-to-Date Technology

- Effective Methods

18. Total Quality Management

TQM: Integrated effort to systematically and continuously improve the quality of an organization’s products and/or services

Statistical process control: family of mathematically based tools for monitoring and controlling quality

Benchmarking: process of legally and ethically studying how other firms do something in a high-quality way and then either imitating or improving on their methods