1. Copyright © 2012 by Cengage Learning. All rights reserved.3- 1 Chapter 3 The Global Environment Prepared by Joseph Mosca Monmouth University

2. Copyright © 2012 by Cengage Learning. All rights reserved.3- 2 Learning Objectives 1.Describe the growth of international business. 2.Identify and discuss global issues in international human resource management. 3.Discuss the human resource management function in international business. 4.Identify and discuss domestic issues in international human resource management. 5.Describe the issues involved in managing international transfers and assignments. 6.Summarize the issues in international labor relations.

3. Copyright © 2012 by Cengage Learning. All rights reserved.3- 3 The Growth of International Business During the 1950s, the U.S. was the dominant force. In the 1960s, the U.S. was challenged by other countries. The U.S. market downturn in 2002 had effects on world markets.

4. Copyright © 2012 by Cengage Learning. All rights reserved.3- 4 International HR Strategy The ethnocentric staffing model : Primarily uses parent country nationals to staff higher level foreign positions. Is based on the assumption that home- based perspectives take precedence over local perspectives and issues positions to parent country nationals.

5. Copyright © 2012 by Cengage Learning. All rights reserved.3- 5 What Are the Staffing Considerations ? Polycentric staffing model : calls for heavy use of host-country nationals throughout the organization. It puts parent-country nationals, host-country nationals, and third- country nationals all in the same category, with the firm attempting always to hire the best person available for a position.

6. Copyright © 2012 by Cengage Learning. All rights reserved.3- 6 Understanding the Cultural Environment A country’s culture can be defined as the set of values, symbols, beliefs, and languages that guide behavior of the people within that culture. Managers in an international business need to be aware of cultural nuances and must be especially cognizant of the role of cultural differences and similarities in workers from different cultures.

7. Copyright © 2012 by Cengage Learning. All rights reserved.3- 7 Specific Human Resource Issues in International Business Exporting is the process of making a product in the firm’s domestic marketplace and then selling it in another country. Licensing involves one company granting its permission to another company in a foreign country to manufacture and/or market the first company’s products in the second company’s local market.

8. Copyright © 2012 by Cengage Learning. All rights reserved.3- 8 Specific Human Resource Issues in International Business (cont’d) Direct Investment occurs when a firm headquartered in one country builds or purchases operating facilities or subsidiaries in a foreign country. In a Joint Venture or Strategic Alliance two or more firms cooperate in the ownership and/or management of an operation on an equity basis.

9. Copyright © 2012 by Cengage Learning. All rights reserved.3- 9 Managing International Transfers and Assignments Expatriates are employees who are sent by a firm to work in another country and may be either parent-country nationals or third-country nationals. Key areas of importance are:  Selection  Training  Compensation

10. Copyright © 2012 by Cengage Learning. All rights reserved.3- 10 Local Compensation Issues In the US compensation assessment is based on an individual’s performance. However, in other countries such as Japan, the emphasis is based more on group work.

11. Copyright © 2012 by Cengage Learning. All rights reserved.3- 11 Hardship Premium A hardship premium (also called a foreign- service premium) is an additional financial incentive offered to an individual to entice them to accept a less attractive international assignment