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QUESTIONS
17-1. How does J&J’s Credo help guide employee behavior around the world?
■ The cornerstone of Johnson & Johnson’s (J&J) six-decade old Credo is their high regard for
human resources.
17-2. How does J&J develop managers for international operations?
■ The executive committee spends much of its time seeking and nurturing talent.
■ The J&J Leadership Development Program drives company culture and superior business
performance.
17-3. What types of training programs does J&J make available to its employees?
■ J&J claims to have the “best and the brightest” employees worldwide, with long tenures,
● SUGGESTED SOLUTIONS TO CASE QUESTIONS
17-4. Traditionally, Japanese MNEs followed an ethnocentric orientation in international
staffing, in which managers from headquarters hold key subsidiary positions. Sony is
shifting away from this model. What approach should Sony follow for staffing its
subsidiaries? When recruiting expatriates for foreign operations, what characteristics
should Sony emphasize to ensure its managers are adept at living and working abroad?
■ An ethnocentric approach suggests that the company staffs its operations mostly with home
When recruiting expatriates for foreign operations, what characteristics should Sony
emphasize in order to ensure managers are most adept at working abroad?
■ Sony should emphasize that candidates have technical competence, self-reliance,
What steps should Sony take to ensure expatriate candidates are adequately prepared
for long-term international assignments?
■ In addition to verifying the characteristics emphasized above, Sony should make sure that
17-5. Sony faces challenges in finding suitable talent for its operations in China and
Europe. What steps should it take to ensure it has an adequate pool of international
managers and other talent for worldwide operations? What should Sony do to promote
global mind-sets?
■ Sony's human resources strategy includes recruiting people with diverse talent, and global
mind-sets. This suggests that Sony should continue to cultivate a geocentric orientation, which
What should Sony do to promote global mind-sets?
■ Sony's senior managers would be expected to hire, develop, and nurture employees who
17-6. What is your view of Sony’s training efforts? What steps could Sony take to
improve its training in light of its multicountry operations?
■ Sony's training efforts appear to be strong. They seem to have a progressive international HR
strategy, given that it seeks independent-minded managers with diverse and strong
What steps could Sony take to improve its training, in light of its highly multinational
operations?
■ Sony's human resources training efforts appear strong; however the use of metrics and
17-7. Sony has experienced labor relations problems in Indonesia and elsewhere. What
strategies should management follow to improve labor relations? What can it do to
reduce the number and severity of labor difficulties the firm might face in the future?
■ According to the case, Sony seems to have learned lessons from its Indonesia and Mexican
experiences. Management should make sure that it understands not only local labor laws and
What can it do to reduce the number and severity of labor difficulties the firm might face
in the future?
■ In its overseas operations, Sony should seek to create strong alliances with labor
17-8. What is your view of Sony’s efforts at corporate social responsibility (CSR) in
international operations? What steps can Sony take to improve CSR in organizing and
managing its operations around the world, particularly in developing countries and
emerging markets?
■ Sony appears to implement a universal approach to corporate standards around the world.
This means that Sony does not do only what is required by local standards and local laws: it
What steps can Sony take to improve CSR in organizing and managing its operations
around the world, particularly in developing countries and emerging markets?
■ Sony can continue its apparently good, corporate practices, and continued to learn how to
improve these by networking with other large corporations that are considered to be models of
V. END OF CHAPTER QUESTIONS
● TEST YOUR COMPREHENSION
17-9. What is international human resource management (IHRM)? Why is it important to
internationalizing firms? What is the role of IHRM in company strategy?
■ International HRM is the planning, selection, training, employment, and evaluation of
17-10. Under what circumstances would an MNE staff itself with (a) parent-country
nationals, (b) host-country nationals, and (c) third-country nationals?
■ Parent country nationals might be desired when headquarters wants to keep strong control
over foreign operations and intellectual property. Host country nationals might be preferred
17-11. What are the characteristics of managers adept at working abroad?
Visit MyManagementLab for suggested answers.
17-12. What are the major components of training for foreign assignments?
■ To ensure managers candidates are adequately prepared for long-term international
17-13. What approaches can human resource managers follow to prepare expatriates for
returning home?
■ Repatriation is the return of the expatriate to the home country after a lengthy foreign
assignment. Some employees find their international experience is not valued at the home
office, they are placed in lesser or ill-suited positions, they have financial difficulties upon
17-14. What factors should human resource managers consider when appraising the
performance of an employee working abroad?
Visit MyManagementLab for suggested answers.
(LO 17.4; AACSB: Application of knowledge)
17-15. Suppose you are working abroad as an expatriate for an MNE. What are typical
components you would expect to have in your compensation package?
■ There are four major elements to the expatriate compensation package:
Base remuneration based on salary at wages that the employee receives in the country.
17-16. What are some key trends affecting international labor?
(LO 17.5; AACSB: Application of knowledge)
■ It must first be noted that each world region and each country has a distinctive approach to
labor that is influenced by history, tradition, and other factors.
Unionization and collective bargaining is increasing in emerging market economies,
while it is become somewhat stable in more developed countries.
17-17. What measures can firms take to enhance the prospects of placing women in
international business jobs?
(LO 17.6; AACSB: Application of knowledge)
■ MNEs have increased opportunities for increasing diversity in their workforce, due to the
international nature of their operations and sales. More progressive firms recognize that
including personnel from diverse backgrounds bring a wealth of experience and knowledge and
help the firm address its problems and opportunities. This may be done by:
Linking managers’ compensation to efforts to hire minorities, women, and people from
■ The text notes that senior managers may assume that women do not make suitable
international leaders, and that foreign men prefer not reporting to female managers. This may
be a myth. Management must investigate if women would have problems working abroad,
● APPLY YOUR UNDERSTANDING
17-18. Nissan Motor Co. is Japan’s second-largest automotive company, with annual
sales of more than USD $100 billion. The firm makes Maxima and Sentra cars, Altima and
Infiniti upscale sedans, Frontier pickups, and the Xterra and Pathfinder SUVs. Some
years ago, Nissan was on the verge of bankruptcy. Then Carlos Ghosn was installed as
the firm’s CEO. He closed inefficient factories, reduced purchasing costs, and introduced
new products. Suppose Nissan asked you to advise it on IHRM issues. What specific
human resource strategies would you recommend to enhance the firm’s performance
further? In particular, how would you advise top management on development of global
managers, preparation and training of employees, and how best to integrate the diversity
of Japanese and Western managers who come from distinct cultural backgrounds?
It appears that Carlos Ghosn did much to cut Nissan’s costs and increase efficiency. If this
Nissan might prefer to hire parent country nationals if it wants to keep strong control over
foreign operations and intellectual property. It may choose host country nationals where
To develop global managers, Nissan should cultivate a geocentric orientation and a global
mind-set by recruiting employees from diverse backgrounds who will bring a holistic
perspective to decision-making on the firm's worldwide operations. Top management would
17-19. Global Wannabe (GW), a manufacturer of musical instruments, is eager to
internationalize. New to international business, within the coming four years, senior
management wants GW to generate at least one-third of its sales from abroad by
establishing foreign marketing subsidiaries and production bases in low-cost countries
to cut manufacturing costs. GW’s president, Larry Gerber, has appointed you to the task
force charged with recruiting managers who can run GW’s operations abroad. What
guidelines would you offer to GW to recruit and select expatriates while avoiding the
problem of expatriate assignment failure and evaluating the performance of employees
posted abroad?
GW’s expatriate employees should have technical competence, self-reliance, adaptability,
interpersonal skills, leadership ability, physical and emotional health and family willing to live
17-20. Ethical Dilemma:
In China, factory people often work long hours with low pay. Some factories lack heating
or air-conditioning, and employees may work with hazardous materials. Workers may be
fired if they complain. However, a growing labor union movement is taking hold in China.
Despite management resistance, firms such as Tesco and Walmart are being forced to
allow Chinese workers to unionize. Unions demand better working conditions and higher
wages, and occasionally they go on strike. Management at some MNEs has prevented
the workforce from unionizing. Other MNEs are establishing operations in Eastern
Europe and Latin America, where labor unions are relatively weak. The Chinese
government worries that unionization is hurting inward FDI by scaring foreign companies
away from China. Suppose you work for Tesco or Walmart in China. Is it acceptable for
your firm to prevent its workers from forming a union? What factors should management
consider when determining the appropriateness and role of unions? To whom is your
firm accountable—its employees or its shareholders? Can companies reach a fair
compromise with workers? Analyze this dilemma by using the ethical framework in
Chapter 4.
Is it acceptable for your firm to prevent its workers from forming a union?
It is acceptable, legal, and expected for a firm to try to persuade its workers to NOT unionize
or fire a worker for JUST CAUSE; however it is unacceptable and illegal for companies to
PREVENT employees from unionizing.
Just Cause is only justifiable if the “employee becomes permanently
disabled, is terminated within a probationary period (usually 1 to 6
months), or is found guilty of incompetence, theft, or disclosure of
confidential information”
What factors should management consider when determining the appropriateness and
role of unions? (Theory
oThe purpose of the union
Protects the rights of the employees
oBenefits of the union
Better working conditions
Increases employees’ loyalty to the company because they feel their rights
and well-being are attended to
To whom is your firm accountable—its employees or its shareholders?
oFirms are primarily accountable to its shareholders in the financial sense
Responsible for providing accurate financial reports
Increasing profits and shareholder wealth
Can companies reach a fair compromise with workers?
UPDATE:
China passed a new Labor Law in 2008 to better protect workers from firms terminating their
employment without reason or for union efforts, which numerous U.S. corporations (Walmart,
Ethical Framework
1. Identify the problem
2. Examine the facts
3. Create alternatives
Evaluate each proposed action to assess its consistency with accepted ethical
standards, using the approaches described earlier:
■ Utilitarian—which action results in the most good and least harm?
■ Rights—which action respects the rights of everyone involved?
■ Fairness—which action treats people most fairly?
■ Common good—which action contributes most to the overall quality of
life of the people affected?
■ Virtue—which action embodies the character strengths you value?
4. Implement course of action
5. Evaluate results
1. Identify the problem
Managers must learn to recognize and manage ethical problems - proactively anticipate,
confront and scan for ethical challenges.
This Dilemma:
Many people in China toil in sweatshops, working long hours with low pay. Some
factories lack heating or air-conditioning, and employees may work with hazardous
materials. Workers may be fired if they complain. However, a growing labor union
movement is taking hold in China. Despite management resistance, firms such as Tesco
and Walmart are being forced to allow Chinese workers to unionize. Unions demand
better working conditions and higher wages, and occasionally they go on strike.
Management at some MNEs has prevented the workforce from unionizing. Other MNEs
are establishing operations in Eastern Europe and Latin America, where labor unions are
relatively weak. The Chinese government worries that unionization is hurting inward FDI
by scaring foreign companies away from China. Suppose you work for Tesco or Walmart
in China. Is it acceptable for your firm to prevent its workers from forming a union? What
factors should management consider when determining the appropriateness and role of
unions? To whom is your firm accountable—its employees or its shareholders? Can
companies reach a fair compromise with workers
2. Examine the facts
Managers must systematically explore the ethical aspects of each decision the firm may make,
regarding its current and potential activities. Determine the nature and dimensions of the
situation. Have all the relevant persons and groups been consulted? What individuals or groups
have a stake in the outcome? How much weight should be given to the interests of each? Do
some parties have a greater stake because they are disadvantaged or have a special need?
This Dilemma:
The issue is how to balance these opposing perspectives: To remain globally competitive
in attracting FDI yet sensitive to the poor working conditions and low wages of Chinese
workers in general. As long as Tesco and Walmart treat their workers well, i.e. at or above
industry standards, why should they be hindered by artificially high labor costs that
unions would no doubt demand, and strikes/disruptions to their market leadership
positions- due to unmet union demands?
3. Create alternatives
Consistent with the pyramid of ethical behavior, actions should be legal, i.e. it should not violate
host or home country laws or conflict with international treaties. Any proposed action should be
commensurate with company policy, the firm’s code of conduct, and its code of ethics.
This Dilemma:
Is it acceptable for Tesco/Walmart to prevent their workers from forming a union? What
factors should management consider when determining the appropriateness and role of
unions? To whom are Tesco/Walmart most accountable – their employees or their
shareholders (who expect Tesco/Walmart to maximize profits)?
Utilitarian – which action results in the most good and least harm?
Rights – which action respects the rights of everyone involved?
◘ Tesco/Walmart Workers Unionize – Right to make the choice of unionization by
◘ Tesco/Walmart Workers Do Not Unionize – Right to make the choice to NOT unionize by
employees
Fairness – which action treats people most fairly?
◘ Tesco/Walmart Workers Unionize – Fair to employees who want power of collective
◘ Tesco/Walmart Workers Do Not Unionize – Fair to consumers and shareholders as prices
Common Good – which action contributes most to the overall quality of life of the
Virtue – which action embodies the character strengths that you value?
4. Implement course of action
Implement your decision.
5. Evaluate results
Evaluate your decision to see how effective it was. How did it turn out? If you had it to do again,
would you do anything differently?
This Dilemma: Students may use the above-mentioned points as a springboard for
further discussion of the implications for unionization and whether Tesco/Walmart
should prevent their workers from forming a union.
■ What factors should management consider when determining the appropriateness and
role of unions? (Practice)
■ Students might note that each world region and each country has a distinctive approach to
labor that is influenced by history, tradition, and other factors. In addition to educating itself
about these factors, Tesco/Walmart should conduct due diligence to become aware of the
following:
● GlobalEDGE™ INTERNET EXERCISES http://globaledge.msu.edu
17-21. Lifestyle factors such as the cost of living vary worldwide. One job of international
human resource managers is to develop appropriate compensation packages for
managers working abroad. The U.S. Department of State provides information firms can
use to calculate compensation around the world. Prepare a report on the factors relevant
to developing a compensation package for expatriates working in Prague and Tokyo,
including Living Costs Abroad, by accessing the State Department through
globalEDGE™ (keywords Travel/Living Abroad) or directly at aoprals.state.gov.
The site reports on the Lodging and M&IE (Meals & Incidental Expenses) rates for countries
worldwide. The State Department data for 2010 are given in the table, in U.S. dollars. There is
no hardship allowance indicated for either Tokyo or Prague. According to the State Department
site, “The cost-of-living allowances are those allowances that are designed to reimburse
employees for certain excess costs that they incur as a result of their employment overseas.” In
addition, “The purpose of the education allowance is to assist an employee in defraying those
costs necessary to obtain educational services (grades K-12) that would normally be free of
charge in the U.S. The allowance is based on the least expensive “adequate” school at post.”
CITY Lodging, per
day
Meals &
Incidental
Expenses, per
day
Cost of Living
Allowance, per
day
Education
Allowance
Tokyo $251 $227 $80 $31,100
Prague $280 $136 $50 $25,650
Typical expatriate compensation includes four components: base salary, benefits, allowances,
and incentives. A Japanese manager working in the United States would receive a base salary
comparable to that paid to managers at the same level in Japan. Benefits include health care
plans, life insurance, unemployment insurance, and a certain number of paid vacation days.
managers receive an incentive. In general, the compensation indicated in the table is
17-22. Stryker Inc. manufactures medical devices and wants to establish a factory in
continental Europe. For the location, management must decide between France,
Germany, and Poland. You have been assigned to research and recommend the best
country from the three choices. Management prefers the country with the best overall
profile of productive and low-cost workers. Good data sources for your research are the
U.S. Bureau of Labor Statistics (www.bls.gov), the European Commission
(http://ec.europa.eu), and the OECD (www.stats.oecd.org). Prepare a recommendation on
which country—France, Germany, or Poland—would be the best choice to locate the
factory. (Note: Such decisions are normally much more complex than implied here, but a
preliminary analysis is a starting point for decision-making.)
Manufacturing Sector
Cost of Labor
Hourly Compensation Costs,
Index Basis
Productivity
Output per Hour
France 104 176.7
Poland 23 154.8
Germany 140 160
Polan would be the best choice to locate a factory, as it has the lowest cost of labor and high
productivity.
oPoland is an emerging market in the European Union
Increasing middle class, improving living conditions, and rising economic
goals (attractive due to their increasing exports, FDI, and sourcing)
17-23. Executive Planet™ provides information for traveling managers and expatriates on
how to live and do business in various countries. Suppose that you work for Virgin, the
British airline, and are assigned to work in Virgin’s office in an emerging market (choose
an emerging market such as Argentina, India, Russia, Mexico, South Africa, or Turkey).
You need to learn how to be effective in dealing with customers and colleagues in the
chosen country. Select three topics (such as making appointments, business dress
guidelines, or gift giving) and prepare an executive summary on how to behave regarding
the topics you selected for your chosen country. You can find Executive Planet™ online
through globalEDGE™ or by visiting the site directly at www.executiveplanet.com.
(LO 17.4; AACSB: Analytical Thinking; Diverse and multicultural work environments)
Chosen emerging market: TURKEY
Business Dress Guidelines
■ Business attire is conservative. Men are expected to wear a suit and a tie and women should
Negotiating and Deal-Making:
■ In Turkey, business is personal. It is important to build a personal relationship when
deal-making. Turkish do business with people they like, trust, and that make them feel
CAREER TOOLBOX EXERCISE
EVALUATING INTERNATIONAL LOCATIONS FOR QUALITY OF LIFE
Visit MyManagementLab for more information.
MyManagementLab
Go to Mymanagementlab.com for Auto-graded writing questions as well as the following
Assisted-graded writing questions:
17-24. What steps can senior managers take to develop global managers?
17-25. In what ways might an employee experience expatriate assignment failure?
17-26. MyManagementLab Only– comprehensive writing assignment for this chapter.
Visit MyManagem entLab for suggested answers
