Prentice Hall, 2002 Chapter 14 Daniels 1 Chapter Fourteen Careers in International Business.

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Chapter FourteenCareers in International Business

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Chapter Objectives To appreciate the challenges and rewards of a career in

international business To grasp the balance between technical competency and

personal mind-set in shaping an individual career plan in international business

To discern the ethnocentric, polycentric, and geocentric mind-sets and their implications for international business careers

To understand the major issues of working abroad as an expatriate–being selected for the position, negotiating a motivating compensation plan, and planning the return home

To learn about approaches that a pending or current expatriate can take to manage the foreign assignment

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IntroductionMore companies now try to outsource part or

all of their international management functions due to the difficulty in filling these positions

Information shows that careers in international business are flourishing

We shall examine:• Ways that international business careers evolve• The shift in ideas about careers• The influence of mind-set• Vital issues in the realm of expatriates

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A Point of PerspectiveTraditionally, discussing careers in international business

started and ended with the tasks of international human resource planning

Now, people who work in international business are rethinking what they do in search of ways that better fit a progressively interlinked world

Change in the old and new ways of working in a globalizing market has tremendous implications for all sorts of careers

Career paths start from the same point of perspective, namely, the mind-set that one uses to make sense of the many varied situations of international business

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A Point of Perspective

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The Idea of a Mind-setMind-set: essentially the interpretive framework

that guides how we classify and discriminate change in ways that let us understand what we perceive to have happened and therefore, anticipate what now may happen

An individual’s mind-set creates the possibility for and shapes the potential of an international business career

Success in international business careers increasingly depends on one’s attitude as much as, if perhaps not more than, one’s technical aptitude

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The Idea of a Mind-set Research spotlights three types of mind-sets:

• The ethnocentric mind-setEthnocentrism: the belief that the values, practices, and

behaviors of the home country are intrinsically superior to those of other nations

Advantages include:o Helps a company transfer its unique competitive skill

overseaso A useful way to make sense of foreign marketso Individuals endure less stress in making sense of

foreign situationsDisadvantages include:

o Trying to make all foreign situations fit one outlook runs the risk of missing out on opportunities

o Reluctance to consider other viewpoints or methods can dull the competitive edge of an individual or company

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The Idea of a Mind-set

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The Idea of a Mind-set• The polycentric mind-set

Polycentric outlook: accepts the importance of adapting to differences, real or imaginary, between the real or home country

Advantages include:

oStaffing of international operations fits better with this mind-set

Disadvantages include:

oThe “going native” phenomenon

oPlacing too much faith in the local staff

oFocusing energies in preferred markets while possibly missing out on lucrative markets

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The Idea of a Mind-set

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The Idea of a Mind-set• The geocentric mind-set

The geocentric mind-set is not tied to a particular home or host nation

Advantages include:

o Does not automatically presume that a particular nation provides a universal solution to every problem or perfect explanation for every action

o Spurs people to appreciate the beliefs, values, behaviors, and business practices of individuals and organizations from any nation

o Can tap into learning opportunities around the world

Disadvantages include:o Hard to develop and costly to maintain

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The Idea of a Mind-set

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The Idea of a Mind-setDeclaring which mind-set is best suited for a

career in international business is unwise

• Neatly categorizing the particular mind-set of an individual or firm is unrealistic

The three mind-sets have distinct strengths and weaknesses

Recent research on the idea of cultural cognitivism suggests that mind-set is a cognitive rather than psychological framework that shapes how one perceives, relates, and interprets information

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The Idea of a Mind-set

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Staffing International Operations: Expatriates or Locals?

Staffing the thousands of home offices and foreign affiliates is a major aspect of international business careers

Reasons to staff with locals include:

• Indisputable competitive advantages

• Information and communication technologies make it cheaper to have real-time connections with facilities around the world

• Some nations do not like the idea of expatriates

• Ability to reach more places in a day

• Larger pools of skillful local managers

• Lessens the need to have home-country managers personally supervise local activities

• Not everyone aspires to be an expatriate

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Staffing International Operations: Expatriates or Locals?

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Staffing International Operations: Expatriates or Locals?

Companies have been moving expatriates around the world for centuries and evidence suggests this trend will continue

However, there do not seem to be fixed rules to the expatriate versus local staffing dilemma

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Staffing International Operations: Expatriates or Locals?

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Staffing International Operations: Expatriates or Locals?

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The Realm of the Expatriate Developing effective expatriates compels organizations to:

• Find people who are prepared for an international business career

• Devise ways to motivate them to perform well

• Capitalize on their new skills and improved outlook Three important areas include:

• Expatriate selection: screening executives to find those with the highest performance potential for a foreign assignmentGenerally, companies look for individuals with skills and

outlooks in the following areas:

o Functional expertise

o Cross-cultural sensitivity

o Leadership ability

o Language proficiency

o Enthusiasm

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The Realm of the Expatriate• Compensation

Once selected for a foreign assignment, managers negotiate with their companies to devise a compensation package that motivates superior performance

o Typically expatriates negotiate their compensation packages in terms of:

Base salaryForeign-service premiumExtraordinary allowancesHardship allowanceCost-of-living adjustmentFringe benefitsTaxation

All things being equal, compensation can determine the success or failure of overseas work assignments

Compensation plans include: home-based method, headquarters-based method, and host-based method

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The Realm of the Expatriate• Repatriation

Returning home from a foreign assignment can be as much of a jolt as initially going overseas

Changes in personal finances can be dramatic upon returnReadjustment to home-country corporate structure poses

problemsReadjusting to life at home can be extremely stressfulExpatriates can boost the success of returning home by dealing with the

following issues:

o Ask about repatriation program

o If none, develop one

o Talk about post-assignment job before leaving

o Stay in touch with mentors

o Ask for a formal pre-repatriation briefing

o Plan to visit home several times during the final stages