Chapter Summary

• Offshoring is when a business relocates or moves part of its operations to a country different from the one it currently operates in.
• Outsourcing is when a company contracts with another company to do some work for another. This can occur domestically or in an offshoring situation.
• Domestic market means that a product is sold only within the country that the business operates in.
• An international market means that an organization is selling products in other countries, while a multinational one means that not only are products being sold in a country, but operations are set up and run in a country other than where the business began.
• The goal of any HRM strategy is to be transnational, which consists of three components. First, the transnational scope involves the ability to make decisions on a global level rather than a domestic one. Transnational representation means that managers from all countries in which the business operates are involved in business decisions. Finally, a transnational process means that the organization can involve a variety of perspectives, rather than only a domestic one.
• Part of understanding HRM internationally is to understand culture. Hofstede developed five dimensions of culture. First, there is the individualism-collectivism aspect, which refers to the tendency of a country to focus on individuals versus the good of the group.
• The second Hofstede dimension is power distance, that is, how willing people are to accept unequal distributions of power.
• The third is uncertainty avoidance, which means how willing the culture is to accept not knowing future outcomes.
• A masculine-feminine dimension refers to the acceptance of traditional male and female characteristics.
• Finally, Hofstede focused on a country’s long-term orientation versus short-term orientation in decision making.
• Other aspects of culture include norms, values, rituals, and material culture. Norms are the generally accepted way of doing things, and the values are those things the culture finds important. Every country has its own set of rituals for ceremonies but also for everyday interactions. Material culture refers to the material goods, such as art, the culture finds important.
• Other HRM aspects to consider when entering a foreign market are the economics, the law, and the level of education and skill level of the human capital in that country.
• There are three types of staffing strategies for an international business. First, in the home-country national strategy, people are employed from the home country to live and work in the country. These individuals are called expatriates. One advantage of this type of strategy is easier application of business objectives, although an expatriate may not be culturally versed or well accepted by the host-country employees.
• In a host-country strategy, workers are employed within that country to manage the operations of the business. Visas and language barriers are advantages of this type of hiring strategy.
• A third-country national staffing strategy means someone from a country, different from home or host country, will be employed to work overseas. There can be visa advantages to using this staffing strategy, although a disadvantage might be morale lost by host-country employees.
• Personality traits are a key component to determining whether someone is a good fit for an overseas assignment. Since 73 percent of overseas assignments fail, ensuring the right match up front is important.
• The ideal expatriate is able to deal with change, is flexible, and has the support of his or her family. Ideal expatriates are also organized, take risks, and are good at asking for help.
• The adjustment period an expatriate goes through depends on his or her initial preparation. Blakeney said there are two levels of adjustment: psychological adjustment and sociocultural adjustment. Although the psychological adjustment may take less time, it is the sociocultural adjustment that will allow the assignment to be successful.
• Training is a key component in the HRM global plan, whether expatriates or host-country nationals are to be hired. Both will require a different type of training. The expatriate should receive extensive training on culture, language, and adjustment.
• Compensation is another consideration of a global business. Most companies keep a standard regional salary but may offer allowances for some expenses. Cost of living, taxes, and other considerations are important.
• Performance should be evaluated by both host-country and home-country managers and employees. The criteria should be determined ahead of time.
• Laws of each country should be carefully evaluated from an HRM strategic perspective. Laws relating to disabilities, pregnancy, and safety, for example, should be understood before doing business overseas.
• Logistical help can be important to ensuring the successful overseas assignment. Help with finding a place to live, finding a job for a spouse, and moving can make the difference between a successful assignment and an unsuccessful one.
• The Visa Waiver Program (VWP) is a program in which nationals of thirty-six countries can enter the United States for up to a ninety-day period. This type of visa may not work well for expatriates, so it is important to research the type of visa needed from a particular country by using that country’s embassy website.

Chapter Case

Fish to Go Is Going Places

Your company, Fish to Go, is a quick service restaurant specializing in fish tacos. Your success in the United States has been excellent, and your company has decided to develop an international strategy to further develop your market share. As the vice president for human resources, you have been asked to develop an international staffing strategy. The organization has decided that it makes the most sense to hire host-country nationals to manage the restaurants. Your current Fish to Go managers earn upwards of $45,000 per year, plus 2 percent profit sharing. The organization is also looking to you to determine and develop a comprehensive training program for your host-country managers. A training program is also needed for employees, but you have decided to wait and develop this with input from the host-country managers. Fish to Go has identified Mexico and the UK as the first two countries that will be entered. Perform the necessary research to prepare a PowerPoint presentation to the board of directors.

1. What are the advantages of choosing a host-country national staffing strategy?
2. Develop a compensation plan for each of the two countries, revising the current compensation for managers in the United States, if necessary. The compensation plan should include salary, benefits, and any fringe benefits to attract the most qualified people. The plan should also address any legal compensation requirements for both countries.
3. Develop an outline for a training plan, making reasonable assumptions about the information a new manager would need to know at Fish to Go.

Team Activity

1. What are four major considerations for aligning the HRM strategy with an overall globalization strategy? Discuss each and rank them in order of importance.
2. Find a team with an even number of members. Split each team into “reasons for localized compensation” and “reasons for regional or global compensation.” Be prepared to debate the issue with prepared points.