THE 21ST CENTURY OFFERS MANY ALTERNATIVES TO THE TRADITIONAL CONCEPT OF ENGAGING IN THE EXPENSIVE AND FRAUGHT RIDDEN ACTIONS ASSOCIATED WITH EXPATRIATE STAFF. CRITICALLY EVALUATE THIS ISSUE GIVING YOUR RECOMMENDATIONS TO AN ORGANISATION CONSIDERING ABANDONING ITS EXPATRIATE PROGRAMME, CITING APPROPRIATE MODELS AND EXAMPLES TO SUPPORT YOUR KEY ARGUMENTS.
INTRODUCTION
The world economy is moving away from the traditional economic system where national markets were considered as distinct entities which were isolated from each other by trade barriers of distance, time and culture. This has been in place since the advent of globalisation. In a bid for internationalisation, companies tend to use expatriates which serves as a home manager
…show more content…
Labour intensive operations can be shifted to countries that can provide cheap labour, like most manufacturing firms are now relocating their base to Asian countries like India, china, due to the low cost of labour. In certain cases availability of raw material might provide an advantage. Tax advantages and incentives could also lead to cost advantages. A third reason for multinational companies to prefer operating in many countries is to spread the risks. If a company puts all its capital in a single country, it is susceptible to the vagaries in that country and can be affected by factors such as general economic depression, interest rate rise, exchange rate variation and so on. Operating from several countries insures the company against such risks.
DRAW-BACKS OF EXPATRIATE ASSIGNMENTS
This section of the essay identifies key factors responsible for the setback of expatriate assignment. These include; costs, the supply and demand issues, expatriate performance and failure and finally career dynamics.
Costs: The high cost of funding the expatriate programme has over ages been a major challenge for companies. Sparrow et al. (2004:139) conclude on the basis of empirical study that few organisations had a true grasp of the costs associated with expatriate assignments, they also highlighted that generally MNCs had little knowledge of the benefits accruing from the
With bringing your factories to foreign countries you get cheaper labor land and can avoid many taxes.
The opportunities to work abroad are more today than they have ever been in the history of mankind. The big planet Earth has become a small global village and sovereign barriers seem to have disappear. While working in a foreign country, some individuals
It is also important to note that quite a number of multinational corporations have in the past setup operations in developing nations in an attempt to make cost savings especially in terms of labor and production costs. With a growing
If That does not favour the company they will invest. In terms of tax planning, companies may find it difficult to expand due to the tax ramifications. Country X (Foreign Country) may have a high tax burden on companies that choose to expand their operations abroad. Other reasons may include the means of advertisement, the start-up costs, and the political market.
When a company relies on a production facility that is not local to their home land, they lose the majority of the control of their operations. Many of the developing countries that are chosen to outsource are underdeveloped which comes with a great deal of instability. When a country is not developed, although labor costs are low, the education level, physical and
The people of those countries will be mad if that company moves out. Since companies have gone global, their officers are also from different parts of the world. Their headquarters are in one place and factories in another. It starts to get hard to tell where the company belongs.
I will first talk about the purpose of having operations done in another country. American companies can decide to move their companies overseas for a few reasons. One reason is that they can hire workers at low wages, for example, in China they can pay as little as 30 cents and hour whereas here they would have to pay employees minimum wage.1 Another reason is because the company would not have to pay employee benefits, such as vacation time sick days, and health insurance.1 A third reason would be that they would not have to follow safety and environmental regulations.1 The last reason would be that they would not have to pay foreign taxes
With globalisation and multiculturalism on the rise, one might expect various benefits from overseas placements.
In analyzing the second reason listed for why outsourcing is used; ‘inability to attract the highest caliber of employees to job functions that may be peripheral to the organization’s core discipline’, companies employ a different kind of outsourcing tactic. This reason leads to offshore outsourcing solutions. If a company cannot attract high caliber domestic employees to job functions secondary to their main function then they seek help where labor may be less expensive and more efficient.
The first step for quantifying expatriation experiences is to implement and maintain a tracking system. HR needs to make it a priority to create or find software that easily tracks the costs and ROI related to the expatriation program. Solvay admittedly had difficulty with the back office
In this case “Kelly’s Assignment in Japan”, we have an example of expatriation poorly managed and unprepared. Different cultures, customs seem very important between Japanese and Westerners. Added to this barrier, we also not that there
In summary, the home culture of an expatriate predisposes them to certain behaviors and situations. It allows them to operate efficiently in that environment. However, moving to the host-culture changes that operating environment and makes their 'mental software ' less efficient and effective. Culture is clearly a relevant variable when expatriating employees and their families for international business assignments. Training can be applied to ameliorate these effects. Also, training provides insight into the procedural, substantive and informational aspects of their work and personal life in the host location.
Face to those options and wide resource, the managers in global enterprises have particular concern about the employees’ ability to disseminate knowledge and innovation throughout their global operations . The use of expatriates has seemed to be a logical choice for staffing, while the use of parent-country nations seems to be most appropriate in some specific situation . Some other global enterprises also prefer integrate the expatriates and local human resource. Nevertheless, each procedure has both advantage and disadvantage.
In the case study “Kelly’s Assignment in Japan”, it is very apparent Kelly’s expatriation was extremely mismanaged. Both her family and company were ill-prepared for the transition.
The objective of MNC to operate in other countries is to gain competitive advantage through several ways. Firstly, MNC is able to take advantage of difference in country-specific circumstances. For example, MNC may choose to locate its productions in less developed country like Vietnam to gain cheap labor cost. Secondly,