International organisational strucutre

1. Dr. Chhavi Jain
International Organisational
Structure

3. HRM
 Activities that attract, select and mange
employees.

4. Organisational Structure
 A firm cannot function unless its various structural
components are appropriately assembled.
Through its design, the firm shall:
 Allocate organisational resources
 Assign tasks to its employees
 Instruct employees about the firm’s rules,
procedures and expectations relating to their jobs
 Collect and transmit information necessary for
problem solving and decision making

5. Factors influencing organisational structure
Organisation Structure
Environment
Internal
Manage
ment
orientati
on
Organis
ation
Size
Employe
e
strength
External
Uncertai
nty
Different
iation
and
Integrati
on
Globalis
ation VS
Local
Respons
iveness
Technolo
gy
Routin
e
Non-
routine

6. Internal Environment
Management
Orientation
Organisation
Size
Employee
Strength

7. Internal Environment
 Management Orientation-
 Ethnocentric – Strong control by the parent
company, strong centralisation in decision making,
most of managers are PCNs.
 Polycentric – allows decentralisation of authority
and decision making, most of managers are HCNs.
 Geocentric – organisation design is cosmopolitan,
with little concentration of decision making or
personnel with any particular nationality.

8. Internal Environment
 Size-
 As organisations grow, they tend to add more
departments and levels, making their structures
COMPLEX.
 Staff number on different positions is increased in order
to help management cope with the expanding size.
 Additional rules and regulations are set to achieve
better coordination. The unchecked proliferation of rules
and regulations may lead to excessive bureaucracy and
reduced efficiency.
 As organisations grow larger, they tend to become more
decentralised.
• Because of the potential effects of size, many
companies try to ensure that their sub-units do not
grow unwidely.

9. Internal Environment
 Employee Strength
When the number of employees increases, the
company is likely to do things in more formalised
way.
It becomes necessary to introduce policies,
procedures and systems, because of lack of one-to-
one face-to-face interactions for efficient execution
of tasks.

10. External environment
 It comprises of a host of forces such as:
 Customers
 Suppliers
 Shareholders
 Competitors
 Regulatory agencies
 Financial markets
 Human Resource markets
 Physical resources
 Cultural influences

11. Environmental Uncertainty
 The environment of a firm can be uncertain or
may fit into a stable pattern.
 A firm that operates in a highly unstable and
uncertain environment tends to have organic
characteristics such as decentralised decision
making, fewer rules and regulations, both
hierarchical and lateral communication channels.
Emphasis is on horizontal coordination with
considerable delegation from one level to the
next. It is necessary for individuals at any level to
monitor the external forces and help decide how
to respond.

12. Environment
Mechanist Structure Organic Structure
Simple Structure Complex Structure
High Formalisation Low Formalisation
High Centralisation Low Centralisation
High Specialisation Low Specialisation
High Standardisation Low Standardisation
Strong Hierarchy Weak Hierarchy
Low Environmental Uncertainty
High

13. Environmental Uncertainty
 A firm operating in a stable environment tends to
have relatively mechanistic characteristics,
such as highly centralised decision making, many
rules and regulations and mainly hierarchical
communication channels. Emphasis is on vertical
coordination but with very little delegation down
the line.

14. Differentiation and Integration
 Differentiation means that within an
organisation, there are departments, each of
which positions itself with respect to its own
relevant external environment.
 Finance department- cash inflows, interest rates,
exchange rates, financial markets, etc.
 Sales department- sales volumes, collections,
customers, products, etc.
 Problem with highly differentiated organisation is
that departments might become independent
islands and function in ways detrimental to the
achievement of overall objectives. Thus there is
need for co-operation and collaboration.

15. Differentiation and Integration
 When there is insufficient cooperation, integration
becomes necessary. Integration ensures
cooperation among different departments.
 In unstable environment there is a greater
differentiation among departments.
 Greater the differentiation, greater the need for
integration.

16. Global Integration or Local
Responsiveness
Multi
Domestic
Strategy
Transnational
Strategy
International
Strategy
Global
Strategy
Low Pressure for Global Integration
High
LowPressureforLocalResponsiveness
High

17. Multi Domestic Strategy
 Responds to pressures for local responsiveness
 Customisation of products to suit the needs of
customers in each country in which it operates
 Company establishes a wholly owned subsidiary
 Strategic control decentralised to each foreign
subsidiary
 Takes advantage of local differentiation
 Problem- it becomes a stand alone company because
the resources and skills are transferred from the
parent company, thus the benefit of global learning is
lost.
 Firms pursuing this strategy tend to adopt worldwide
area structures.
 Example- Heinz, Ford, GM

18. International Strategy
 It replicates certain features of Multi domestic
approach.
 Limited local responsiveness.
 Alike multi domestic strategy the firm transfers its core
competencies to the foreign subsidiary so that it can
reap the differentiation advantage
 But core competencies in R&D, marketing and
product development are centralised at home.
 All other operating decisions are decentralised.
 The need for coordination is moderate.
 Example- Coca Cola, Mc Donald’s
 These firms follow worldwide product division
structure.

19. Global strategy
 A standardised product is manufactured at a few
low-cost locations and then offered to the global
market.
 Alike international strategy, only limited
customising is allowed, to suit the tastes of
individual markets.
 Product standardisation allows a firm to achieve
huge global economies of scale which translates
to lower costs and lower prices.
 Example- AT&T
 Operate with a worldwide product division
structure

20. Transnational strategy
 Handles both pressures- global integration and local
responsiveness
 Operate with matrix type structures in which both
product divisions and areas have significant influence.
 Need for global integration creates pressures for
centralising some operating decisions- particularly
R&D and production.
 At the same time, need to be locally responsive
creates pressure for decentralising other operating
decisions to subsidiaries- mainly marketing
 These companies tend to mix relatively high degrees
of centralisation for some operating decisions with
relatively high degrees of decentralisation for others.
 Example- P&G

21. Technology
 Within an organisation, technology exists at three
levels-
 Individual- personal skills and knowledge
employees possess
 Functional/ Departmental- procedures and
techniques that groups use to perform their work
and create value constitute technology
 Organisational- efforts and machinery used to
conert inputs to outputs

22.  All international business takes inputs from the
environment and creates value from inputs by
converting them into output through a conversion
process. Technology is present in all
organisational activities- input, conversion and
output.
Work enters
Input process
(Skills,
Procedures and
Techniques)
Conversion
process
Output processWork leaves

23.  At the INPUT stage, technology- skills,
procedures and techniques- allows each
department to handle relationships with outside
stakeholders so that the firm can manage its
specific environment.
 Example-
 HR Department- techniques such as interviewing
procedures, psychological testing is used to hire
right people for right jobs.
 Finance Department- applies techniques for
obtaining the funds at lower costs.

24.  CONVERSION stage- technology – a
combination of machines, techniques and work
procedures- transforms inputs into outputs.
 Best technology adds value to the conversion
process, in addition to complete the process.

25.  OUTPUT stage- technology allows an
organisation to effectively dispose of finished
goods and services to customers.
 To be effective, a firm must possess techniques
for testing the quality of the end product, for
marketing it and for rendering post-sale services.

26. Technology Dimensions
Routine
Non-routine

27. Routine Technology
 When technology is ROUTINE, employees
perform clearly defined tasks according to set
rules and procedures.
 The work process is programmed in advance and
is highly standardised. Because of the
standardised work process, employees only need
to learn the procedure for performing the task
effectively.
 Decision making is centralised and routine
technology tends to have MECHANISTIC
structure.

28. Non-routine Technology
 Firms operating with non-routine technology face
a different set of factors that affect the design of
the organisation.
 Tasks become less routine and more complex.
 Firms need to develop an ORGANIC structure
that allows employees to quickly respond to and
manage an increase in the number and variety of
exceptions and develop new procedures to
handle new problems.
 Decision making is decentralised.
 Organisation structures tend to be FLAT.

29. Organisational structure
 Organizational structure is a system that
consists of explicit and implicit institutional rules
and policies designed to outline how various work
roles and responsibilities are delegated,
controlled and coordinated.
 Organizational structure also determines how
information flows from level to level within the
company.

30. Organisational structure
 International Division Structure
 Worldwide Functional Structure
 Geographic Area Structure
 Product Organisation Structure
 Mixed Structure
 Matrix Structure
 Networked Structure

31. International Division Structure
 The overseas unit is an adjunct
to the parent company.
 It handles all the international
activities which may be
organised by function, product or
geographic area.
 All the overseas subsidiaries are
under the authority of the
international division head-
usually Vice President, who
coordinates the overseas
activities.
 The international division allows
the MNC to concentrate
resources and create specialised
programmes and activities
targeted on international
operations, while simultaneously
keeping such activities
segregated from the firm’s on-
going domestic activities.
 Example- Coca Cola, Titan
HQ
Domestic
Division
International
Division
Regional
Members
America Europe Asia

32. International Division Structure
Advantages
 All the activities are
under one head,
control and
communication are
easy.
 The structure can also
respond quickly to the
changes in the
international business
environment.
Disadvantages
 The structure
separates the
domestic and
international
managers , which can
result in two different
camps with divergent
objectives.

33. Worldwide Functional Structure
HQ
Manufact
uring
Plant A
Germany
Plant B
Brazil
Marketin
g
US Africa Europe
Finance
Location
s
Other
Function
s
Location
s

34. Worldwide Functional Structure
 Each functional department or division is
responsible for its activities around the world.
 It is managed by companies that have narrow or
similar product lines.
 Each functional area deals with global market,
specialisation and concentration of functional
expertise can be taken well.
 Control of various functions can be exercised
easily.
 It focuses attention on the key activities of firm.
 Adapted in single business companies, dominant
product companies and vertically integrated
companies.

35. Worldwide Functional Structure
Advantages
 Effective in single business
firms where key activities
revolve around well defined
skills and areas of
specialisation.
 In-depth specialisation and
focused concentration
enhances operating efficiency
and core competencies.
 Promotes maximum utilisation
of up-to-date technical skills
and enables firms to capitalise
on specialisation and
efficiency.
 Promotes common values and
goals which facilitates
cooperation and collaboration
within the department.
Disadvantages
 Departmental members see
the activities from the
narrow view point of
department rather than the
total organisation.
 Absence of inter-
departmental coordination
and cooperation.
 Inter-departmental policies
result in conflict, delay in
decision making, ineffective
decision making.

36. Geographic Area Structure
HQ
Europe and
Latin America
Division
UK
Manufacturing
Marketin
g
Finance
Venezue
la
Italy
North America
and Pacific
Division
US Japan Canada

37. Geographic Area Structure
 Worldwide activities are organised by dividing the globe
into different geographic areas.
 Regional manager as VP of each area is responsible for all
business activities within that geographic area.
 Example- in US soft drinks have less sugar than in South
America, so the manufacturing process must be slightly
different at two places.
 In England people prefer bland soups, but Indians enjoy
soups with lots of spices. In Turkey, Italy and Spain people
refer a milder and sweeter blend.
 Example-
 Ranbaxy (4)- Middle East, Europe and Africa, Asia Pacific and
America
 Starbucks(4)- China and Asia Pacific, America, Europe Middle
East, Russia and Africa

38. Geographic Area Structure
Advantages Disadvantages
 Products and services are
better designed to the
climatic and cultural needs
specific to geographical
regions.
 It allows the firm to respond
to the technical needs of
different areas.
 Production and distribution in
different locations better
serve the consumer needs of
various nations.
 It enables a company to
adapt to varying legal
systems.
 Good functional coordination
 Clarifies profit/ loss
accountability.
 More functional personnel
are required.
 Duplication of
equipments, facilities
 Coordination of company
wide activities would be
difficult.
 Problem of imposing
degree of uniformity and
diversity
 Difficult to maintain
consistent company
image or reputation
 Results in loss of
specialisation
 Encourages dysfunctional
competition for resources.

39. Product organisation
HQ
Product
Division A
America Africa
Australi
a
Europe
UK
Manufacturin
g
Marketi
ng
Finance R&D
German
y
Spain France
Asia
Product
Division B
Product
Division C

40. Product organisation
 The product design assigns worldwide responsibility for specific
products or product groups to separate operating divisions within
a firm.
 Manager in charge of product division has authority for the
product line on a global basis.
 Global product divisions operate as profit centres.
 Managers of product divisions run the operations with
considerable autonomy.
 They have the authority to make important decisions.
 HQs maintain control in terms of budgetary constraints and
home office approval for key decisions.
 Works best when the firm has diverse product line or its product
lines are sold in diverse markets.
 Example- Starbucks- coffee and related products, baked goods,
merchandise like mugs, etc.
 Example- Motorola

41. Product organisation
Advantages
Disadvantages
 Coordination among functional
areas like product design,
production, distribution, marketing
is effective, as all functions are
performed in each department.
 Since each department is
independent, most of the decisions
can be made at departmental level
without involving the top
management in the process.
 Fast decisions
 Enhancement of organisational
competency to compete in rapidly
changing environment
 Clarifies profit /loss accountability
 Inconsistent
decisions from one
department to
another
 Difficulty in allocating
over-heads
 Duplication of
equipments and
personnel
 Loss of specialisation
 Emphasis on
departmental rather
than on
organisational goals.

42. Mixed Structure
HQ
Area President North
America
Subsidiary
Head 1
Subsidiary
Head 2
President Product A
Worldwide except North
America
Subsidiary
Head 1
Subsidiary
Head 2
President Product B
Worldwide except North
America
Subsidiary
Head 1
Subsidiary
Head 2

43. Mixed Structure
 Most firms follow a hybrid design which best suits
their purpose as dictated by size, strategy,
technology, environment and culture.
 Managers start with basic prototypes, merge
them and eliminate some pieces and create new
elements unique to the firm as they respond to
changes in the organisation’s strategy and
competitive environment.
 Example- Philips, Sanyo

44. Mixed Structure
Advantages
 It allows the firm to
create the specific
types of design the
best meets its needs.
Disadvantages
 Problems emerge with
communication flow,
chains of command.

45. Matrix Structure

46. Matrix Structure
 It emerges when one design is superimposed on top
of an existing, but different form. The resulting design
is quite fluid, with new matrix dimensions being
created, escalated or reduced and eliminated as
needed.
 It permits a firm to form specific product groups using
members from existing functional departments. These
product groups can then plan, design, develop,
produce and market new products with appropriate
input from each technical area.
 In this way the firm can draw on both the functional
and product expertise of its employees.
 After a given product development task is completed,
the product group may be dissolved. Its members will
then move on to new assignments.

47. Matrix structure
 There are three roles in a matrix organisation that
differ from those in single dimension structures.
1. There are managers who report to different
matrix bosses
2. There are the matrix managers who share the
subordinates
3. There is the top manager who is expected to
head the dual structure and balance and
adjudicates disputes
 It is mainly utilised by technology firms, turnkey
firms and construction firms.
 Example- L&T, Siemens (now follows hybrid

48. Matrix Structure
Advantages
 It facilitates the flow of
communication throughout
the organisation because of
the dual interaction. Before
key decisions are made the
structure brings to bear the
two intersecting perspectives.
 It promotes organisational
flexibility .
 It allows firms to take
advantage of functional area,
customer and product
organisation designs as
needed, while minimising
disadvantages of each.
Disadvantages
 The matrix structure is not
suitable for a firm that has
few products and operates
in a relatively stable market.
 The structure is clumsy and
bureaucratic. It may require
many meetings to get any
work done
 Complex to manage
 Hard to maintain balance
between the two lines of
authority
 May result in conflict
between functional and
project managers.

49. Internal Network Structure
 An internal network
structure exists when
the organisation
establishes each
subunit as an
independent profit
center allowed to buy
and sell services to
each other and the
external market.

50. Externally Networked
Organisation
 The externally
networked
organisation
develops
temporary
relationships
with external
corporations
and institutions
to meet goals.
Market
Share
R&D
Consortiums
Licensing
Agreements
with other
nations
Contracts with
small
companies to
match
competition
Joint Venture
with MNCs

51. Networked Structure
Works best when:
 Business environment is dynamic and always in
flux
 Consumers demand highly customised services/
products that require complex technology

52. Networked Structure
Disadvantages
 Tough to manage
numerous lateral
relationships across
many members
 Hard to maintain
commitment of
members over time
Advantages
 Highly flexible without
much managerial
layers
 High individual
participation and
distinction
 Crosses departmental
and geographical
boundaries

53. Choosing a structure
 Variables that help in choosing an organisational form
that best fits the organisation:
Relative importance in the present and future of foreign
and domestic markets to the firm’s competitive strategy.
 historical background of firm and its evolutionary stage
in global operations
Nature of a firm’s business and its product strategy.
Management traits and management philosophy of the
firm
Availability of and willingness to invest in internationally
experienced management personnel.
Capacity of a firm to adjust to major organisational
changes
 Degree of centralisation and the extent to which the firm
wants to decentralise its power of decision making and
grant autonomy to its subsidiaries.

54. Issues in Organisational Design
Global
Organis
ation
Design
Centralisation
VS
Decentralisatio
n
Role of
Subsidiary
Directors
Non-
traditional
organisatio
nal
arrangeme
nts
Impact of
Information
Technology
Integrating
mechanism
s
Control
systems
Corporate
culture
Managing
change

55. Centralisation Vs
Decentralisation
 It involves the level of autonomy, power and
control it desires to grant to its subsidiaries.
 Decentralisation allows mangers of subsidiaries
to make decisions which serve host country
needs best, but overall interests of the firm are
compromised.
 Centralisation of decision making helps the firm
retain control at HQs and protect the overall
interests of the company, but the ability of
subsidiary managers to respond quickly and
effectively to changes in their local market
conditions is curbed.

56. Centralisation Vs
Decentralisation
• Centraslis
ed at
HQs
• Loose-tight
decision
making
• Centralis
ed at HQ
• Decentralise
s authority to
its foreign
subsidiaries Multi
Domest
ic
Strateg
y
Internat
ional
Strateg
y
Global
Strateg
y
Transn
ational
Strateg
y

57. Use of Subsidiary Board of Directors
 Subsidiary of any international firm, particularly
full owned, will have its own BODs to oversee the
activities of the top level managers in that
subsidiary. The issue before any MNC is whether
to view the creation of a subsidiary BODs as a
proforma exercise and give the board a little
authority or to empower the board with
substantial decision making power.
 Vesting the subsidiary BODs with the authority of
decision making amounts to decentralisation of
power, which is welcome in as much as the
subsidiary can act quickly and decisively without
having to seek parent’s approval.

58. Use of Subsidiary Board of Directors
 Further if the MNC decentralises authority to local
levels, an active board provides a clear
accountability and reporting link back to HQs.
 A potential disadvantage of empowering a
subsidiary’s board is that the subsidiary may
become too autonomous and may fail to maintain
the desired accountability with the parent firm.

59. Use of Subsidiary Board of Directors
Four major areas in which MNCs use subsidiary
boards are:
1. To advise, approve and appraise local
management
2. Help the unit respond to local conditions
3. Assist in strategic planning
4. Supervise the subsidiary’s ethical conduct

60. Non-traditional Organisational Arrangements
 MNCs expand their operations in ways that differ
from those used in past. These include
acquisitions and joint ventures.
 These arrangements do not use traditional
hierarchical structures and therefore cannot fit
into any design.

61. Organisational Design for
Acquisitions
 In case of acquisitions MNCs have used a
structural agreement that promotes synergy while
encouraging local initiative by the acquired firm.
 The result is an organisation design that draws on
the traditional structures but still has a unique
design specifically addressing the needs of the
two firms.

62. Organisational Arrangement for Joint
Ventures
 In JVs all parties contribute to the undertaking
and coordinate their efforts for the overall good of
the enterprise.
 Samsung with Motorola to develop next gen
digital assistants; with AT&T to create pen based
computers; with Toshiba to make 64 megabyte
flash memory chips, etc.
 It requires carefully formulated structure that
allows each partner to contribute what it can and
efficiently coordinate their efforts.
 All the co-venturers should mend their different
values, management styles, action orientation
and preferences in favour of the JV.

63. Role of Information Technology
 Information technology lends competitive advantage
to companies.
 Benefits-
 It reduces the need for hierarchy and brings down
bureaucratic costs.
 It enables business become responsive to local needs
faster.
 It also enables companies to create virtual products-
products that are customised to the needs of individual
customers- without additional cost.
 Problems-
 There may be opposition within the firm to the
introduction of IT. Because it makes organisation flatter.
 It eliminates the human element of communication.

64. Integrating Mechanisms
 The need for coordination is not felt much in
MULTI-DOMESTIC companies as they are
basically concerned with responding to local
needs. They work as stand alone entity, thus the
need for coordination among areas is minimised.
 As company goes GLOBAL, the need for
coordination increases. It can be achieved
through tight centralisation. Firms look towards
integrating mechanisms, both formal and
informal, to help achieve coordination.

65. Formal Integrating Mechanisms
Direct Contact
Liaison Roles
Teams
Matrix Structure
Increasing Complexity of
integrating mechanisms

66. Informal Integrating Mechanisms
Mutual
Acquaintances
Interaction through travel,
training, conferences,
taskforce experiences, joint
meetings, etc
Personal
Contact

67. Informal Integrating Mechanisms
 Firms make use of computer and
telecommunication networks to provide the
physical backup for informal networks, email,
video conferencing and high speed data systems
make it easier for managers scattered across the
globe to get to know each other.

68. Control Systems
 Controlling becomes difficult because of the
following factors:
 Distance
 Diversity
 Degree of uncertainty
 Differences in approach

69. Control systems
 Control systems employed by MNC include personal,
bureaucratic and output checks.
 Personal/ Direct control- control by personal
contact with subordinates.
 Bureaucratic Control- it include rules and
procedures that direct the actions of the subsidiaries.
Eg. budgets
 Output controls- it involve setting goals for
subsidiaries to achieve; expressing these goals in
terms of relatively objective criteria such as
profitability, productivity, growth, market share and
quality; and then judging the performance of subunit
management by their ability to achieve the goals.
Goals are normally established through negotiations
between subsidiaries and HQs.

70. Culture in International Business
 Corporate culture is the set of shared values that
defines for its members what the organisation
stands for, how it functions and what it considers
important.
 Culture helps bring about coordination among
different subsidiaries of a firm.
 Culture control exists when employees “buy into”
the norms and value systems of the firm. When it
occurs, employees tend to control their own
behaviour, which reduces the need for direct
supervision. A firm enjoying strong culture
obviates the need for any other control system.

71. Creating Culture in Organisation
 The creation of corporate culture for an MNC
usually starts with the firm’s mission statement.
 The mission statement, spells out the firm’s
values, goals and the basic operating philosophy.
The management should have:
 Symbols- like corporate logo
 Heroes- successful or distinctive managers
 Legends- stories about successes and failures that
get passed from employees to employees.
 Shared experiences- working together towards
shared goals

72. Managing change in International
Business
 Change takes place because of environmental
changes and change in technology and cultural
values .

73. HRM Considerations
 Selection and Staffing
 Training and Development
 Compensation
 Performance Appraisal
 Repatriation of Expatriates
 Labour Relations

74. Selection
 It is the first step in the process of international
human resource management. The organisations
involved in international business have to select
people for its domestic operations as well as for
its foreign operations.
 The organisations adopt three types of
approaches for selecting its employees-
 Ethnocentric approach- Toyota, Matsushita,
Samsung
 Polycentric approach- Unilever
 Geocentric Approach- Dow Chemical

75. Staffing
 HRM activities that are associated with hiring
employees and filling positions.
Staffing
Host Country
Nationals/
Locals
Parent Country
Nationals /
Expatriates
Third Country
Nationals

76. Parent
Country
Nationals
*Control by HQ is
facilitated
* They may be the
most qualified
people
*Managers are
given international
experience
*Opportunities
for HCNs are
limited
*Adaptation may
take a long time
*PCNs are
usually
expensive
Third Country
Nationals
* They may bridge
the gap between
HQ and the
subsidiary
* They may bridge
the gap between
PCNs and TCNs
*They may be less
expensive than
PCNs
* Host
government and
employees may
resent TCNs
* Similar to
disadvantages
for PCNs
Host Country
Nationals
* Language and
cultural barriers
are eliminated
* HCNs stay
longer in
positions
* Usually cheaper
* Control and
coordination by HQ
may be impeded
* HCNs may have
limited career
opportunities
*international
experience for
PCNs are limited

77. MNE
Strategies
Home
Replication
Localisation
Global
Standardisa
tion
Transnation
al
Staffing
Approach
Ethnocentri
c
Polycentric
Geocentric
Geocentric
Top manager at
local
subsidiaries
PCNs
HCNs
Mix of all
Mix of all

78. Expatriate Managers
 They are the people who work for the organisation in
the nations to which they do not belong.
 They could either be the citizens of the parent country
of the organisation, HCN or they could be the citizens
of third country TCN.
 The term FAILURE of expatriate managers refers to
the phenomenon of premature return of these
managers to their home country.
 Factors which should be taken into consideration
while selecting expatriate managers are:
 Competence
 Cross-cultural understanding
 Self-reliance
 Health and family

79. Expatriation- leaving one’s home
country to work in another country
Expatriate Roles
#Strategist
#Daily Manager
#Ambassador
#Trainer
MNE HQs
in parent
country
Subsidiary
in Host
Country

80. Training and Development
 The focus is on providing information and
experience related to customs, cultures and work
habits of the people in which the expatriate
manager has to work to ensure that he/she
carries out the specific job more effectively.
 Apart from the technical training, the
organisations must provide cultural training,
language training and practical training in order to
reduce expatriate failure.
 The objective of development is to increase the
overall skill levels of managers so that they are
able to manage the international affairs more
successfully.

81. Compensation
 The company should pay the same compensation,
across the nations, to the same category of
employees or not.
 Organisations with geocentric approach, may face
resentment and frustration in employees who are less
paid. Employees of different nationalities that are
posted at different locations start comparing their
compensation.
 Expatriate manager’s compensation has following
components:
 Basic salary
 Allowances
 Foreign service premium
 Taxation

82. Performance Appraisal
 Performance appraisal of expatriate managers is different
from the appraisal of domestic managers, as in the former
the person to be evaluated is working in a far distant land,
away from the headquarters, whereas in the latter, the
person is working in the same nation and close to the
evaluators.
 It makes the issue of performance appraisal of expatriate
manager a bit difficult as the people who have selected him
and assigned him the particular foreign job are away from
him.
 So in many organisations the appraisal is done by the HQ
people who are assisted by the on-site local managers
who provide them the information regarding the ground
realities, and the former expatriate managers who have
worked in the same host nation in order to eliminate the
bias which could get introduced because of the difference

83. Repatriation of expatriates
 It refers to the return of expatriates to their home
after the completion of their foreign assignment.
 The problems mainly faced by them are:
 Problems related with personal finances
 Problems related with the readjustment to the home
nation working environment
 Problems related with the readjustment to the home
nation social life.