GROUP 5:

Introduction
Chicago Food & Beverage Company was
established in Chicago in 1963.
It produces fruit jams, canned fish, meat,
vegetables, and non-alcoholic beverages.
It became the fifth largest American
producer in the food and beverage sector
in 1985.
Foreign expansion plans started at the
beginning of 1985 with the new CEO Mr.
Bill Stevens.

Topic 1: Question 1
Internationalization
strategies

Topic 1: Question 1
Internationalization
strategies
Multi domestic or localization strategy:
customizing the firms goods/services to tastes and
preferences in different national markets.
Global strategy:
reduction of cost that comes from economies of scale,
learning effects, and location economies.
Transnational strategy:
hybrid of multi domestic and global strategies;
retaining of central control of operations and
responsiveness to local needs.
International strategy:
products which designed with domestic market in mind
are sold internationally with minimal localization.

Topic 1: Question 1
Internationalization
strategies

Between 1985 & 1990 acquired 3 local

enterprises in Belgium, France and Germany.
In 1991 the first Joint Venture in Singapore.
In 1995 the second Joint Venture in Hong
Kong.
In 1998 the third Joint Venture in Haiphong.
Each joint venture produces its own products
which are distributed within the local market.
Subsidiaries are entirely independent from
each other.
Multi domestic/localization strategy!!!

Topic 1: Question 1
Internationalization
strategies

In 2000 regrouping into 3 regions:

USA with its center in Chicago; Europe
with its center in Brussels; Asia in
Singapore.
Certain products will be produced by
certain subsidiaries for others.
Characteristics of Global strategy!!
Subsidiaries continue producing local
specialties though they are dependent
on certain products from other
subsidiaries. Transnational strategy!!!

Topic 1: Question 2
HRM orientation, comments &
recommendations

Topic 1: Question 2
HRM orientation, comments &
recommendations

CFB employed 25 American

expatriates.
Head office recruits expatriates
for subsidiaries.
Ethnocentric orientation!!!

Topic 1: Question 2
HRM orientation, comments &
recommendations

Problems:
Expatriate managers may
experience adjustment problems
Expatriate managers may attempt
to impose styles which are
appropriate at the organizations
headquarters but which may be
deemed inappropriate in the host
country

Topic 1: Question 2
HRM orientation, comments &
recommendations

Develop regiocentric approach!

Hire managers within the region
of the business or locally since
they are aware of culture and
hence better understand and
influence employees!
Let regional branches take
decisions for themselves rather
than head quarters!

Topic 2: Question 1
Paul Fierman as an expatriate manager

1995 Bachelors Degree in Marketing

1995 Product vice-manager with
CFB.
1998 Regional product manager
2000 Country brand manager
2002-2004 MBA in International
Management
2004 Expatiation to Haiphong.

Topic 2: Question 1
Paul Fierman as an expatriate
manager

The only international experience he had

was a year in Oxford, Great Britain.
No deep research on the country. 3 books
about Vietnam are outdated.
Lack of communication with HQ. 3 hour
meeting with Robert Greenberg.
Too much interest in financial side of
assignment.
Unhappy spouse.
Bad management of local employees.
Lack of adaptation and flexibility.

Topic 2: Question 1
Paul Fierman as an expatriate
manager

Companys fault:
hasty recruitment
lack of communication with Paul
lack of training programs

Topic 2: Question 2
Expatriate management & recruitment
Expatriate selection.
Training and
management
development
Repatriation of
expatriates
Performance appraisal
Payment for
expatriates

Topic 2: Question 2
Expatriate selection problems:
- tendency to equate
performance in homecountry with overseas;
- primary focus on
technical skills;
- ignoring of
international experience
and adaptability skills

Topic 2: Question 2
Expatriate management &
recruitment

Expatriate selection:
HR should select the appropriate candidates for
expat assignment. For senior position it is wisely
to hire staff with extensive international
experience rather than with proper technical
skills, particularly in the country where the post
is to be held.
The characteristics of ideal candidate for
expatriation:
- high self-esteem and self-confidence;
- good communication skills;
- desire to learn a foreign language;
- high adaptability
- ability to empathize with people of other
cultures

Topic 2: Question 2
Expatriate management &
recruitment
Training and management development
Company should provide training as for
the expatriate as well for his/her spouse
on assignment and culture of the country
where the assignment will take place.
Training on development of managerial
skills.
Company should create adaptation policy.

Topic 2: Question 2
Expatriate management &
recruitment
Repatriation of expatriates
Company should develop programs
on repatriation for expatriate
managers in order to prepare them
for reentry into their home-country:
- changes in their physical and
professional landscapes;
- encourage expats to use their
knowledge and experience which
they got abroad.

Topic 2: Question 2
Expatriate management &
recruitment
Performance appraisal
On-site managers appraisal.
Evaluation should be made by the
same nationality as the expatriate
and by the former expatriate.
Home-office managers should be
consulted.

Topic 3: Question 1
Expatriate compensation
methods

Balance sheet
Negotiation
Localization
Cafeteria plans

Topic 3: Question 1
Expatriate compensation methods
Balance sheet approach

The balance sheet approach

The Balance Sheet is an approach originally
designed by Mercer the basic objective of
which is maintenance of home-country
living standard plus financial inducement:
- foreign service premium;
- allowances e.g. hardship allowance,
housing allowance, cost-of-living
allowance, education allowance.
- return ticket to home country paid;
- life insurance in countries which are
under war.

Topic 3: Question 1
Expatriate compensation methods
Balance sheet approach
Advantages

Disadvantages

Equity between
assignments &
expatriates of the same
nationality;
Facilitates international
mobility;
Easy to communicate to
employees.

Can result in great

disparities between
expatriates of different
nationalities & local
nationals;
Difficult to manage as
requires a lot of
information on cost of
living index, taxation
system and salary
comparison.

Topic 3: Question 1
Expatriate compensation methods
Negotiation approach

The negotiation
method
The employer and
employee simply
negotiate the
package of
compensation.

Topic 3: Question 1
Expatriate compensation methods
Negotiation approach
Advantages

Disadvantages

Effective in case the

company has a small
number of expatriates.

Relatively costly
Creates comparability
problems between
various expatriates.

Topic 3: Question 1
Expatriate compensation methods
Localization approach

Localization
approach:
It is based on the host
countrys salary and it
is easy to see the
different salaries of
the same position in
the different
countries.

Topic 3: Question 1
Expatriate compensation methods
Localization approach
Advantages
Equity between local
nationalities salaries
and expatriates;
Easy to administer

Disadvantages
Need for negotiating
supplements;
Less attractive if
salary in host country
is much bigger than
salary in overseas
country.

Topic 3: Question 1
Expatriate compensation methods
Cafeteria approach
The cafeteria approach
individualizing of each expats benefit plans;
the employer gives each employee a benefits fund
budget, and lets the person spend it on the
benefits he/she prefers, subject to two constraints;
1st, the employer must limit the total cost for
each employees benefits package. 2nd, each
employees benefits plan must include certain
required items for example, Social Security
workers compensation and unemployment
insurance.

Topic 3: Question 1
Expatriate compensation methods
Cafeteria approach
Advantages
Allows employee to
choose the benefits
he/she needs;
Flexible

Disadvantages
Employees can make
bad choices
Administrative costs
can be high

Topic 3: Question 1
Expatriate compensation methods
From 1985 till 2002 CFB used
negotiation method.
In 2002 HR introduced mixed
compensation method which is based
on different salaries for junior and
senior managers.
More than 6 years of international
experience international method;
Less than 6 years home country
method.

Topic 3: Question 2
Suggestions on Expatriate compensation
methods
HR management should clearly
communicate the compensation
package to each expatriate.
The basic salary should be based on
experience and skills of the expatriate.
The benefits should be the same for all.
The package offered should be the
same for expatriates from the different
countries but with the same
background.