Chapter Fourteen

Chapter Fourteen Careers in International Business Chapter 14 Daniels

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 Chapter 14 Daniels

Introduction • More 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 Chapter 14 Daniels

A Point of Perspective • Traditionally, 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 Chapter 14 Daniels

A Point of Perspective Chapter 14 Daniels

The Idea of a Mind-set • Mind-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 Chapter 14 Daniels

The Idea of a Mind-set • Research spotlights three types of mind-sets: • The ethnocentric mind-set • Ethnocentrism: the belief that the values, practices, and behaviors of the home country are intrinsically superior to those of other nations • Advantages include: • Helps a company transfer its unique competitive skill overseas • A useful way to make sense of foreign markets • Individuals endure less stress in making sense of foreign situations • Disadvantages include: • Trying to make all foreign situations fit one outlook runs the risk of missing out on opportunities • Reluctance to consider other viewpoints or methods can dull the competitive edge of an individual or company Chapter 14 Daniels

The Idea of a Mind-set Chapter 14 Daniels

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: • Staffing of international operations fits better with this mind-set • Disadvantages include: • The “going native” phenomenon • Placing too much faith in the local staff • Focusing energies in preferred markets while possibly missing out on lucrative markets Chapter 14 Daniels

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: • Does not automatically presume that a particular nation provides a universal solution to every problem or perfect explanation for every action • Spurs people to appreciate the beliefs, values, behaviors, and business practices of individuals and organizations from any nation • Can tap into learning opportunities around the world • Disadvantages include: • Hard to develop and costly to maintain Chapter 14 Daniels

The Idea of a Mind-set • Declaring 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 Chapter 14 Daniels

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 Chapter 14 Daniels

Staffing International Operations: Expatriates or Locals? Chapter 14 Daniels

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 Chapter 14 Daniels

Staffing International Operations: Expatriates or Locals? Chapter 14 Daniels

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 assignment • Generally, companies look for individuals with skills and outlooks in the following areas: • Functional expertise • Cross-cultural sensitivity • Leadership ability • Language proficiency • Enthusiasm Chapter 14 Daniels

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 • Typically expatriates negotiate their compensation packages in terms of: • Base salary • Foreign-service premium • Extraordinary allowances • Hardship allowance • Cost-of-living adjustment • Fringe benefits • Taxation • 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 Chapter 14 Daniels

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 return • Readjustment to home-country corporate structure poses problems • Readjusting to life at home can be extremely stressful • Expatriates can boost the success of returning home by dealing with the following issues: • Ask about repatriation program • If none, develop one • Talk about post-assignment job before leaving • Stay in touch with mentors • Ask for a formal pre-repatriation briefing • Plan to visit home several times during the final stages Chapter 14 Daniels

Chapter Fourteen