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Host-country nationals (locals)

natives of the country in which they work

EX: born and raised in a country and works in that country.

Expatriates

people who live and work outside their native countries.

EX: Born and raised in a country but works in another country

Parent-country nationals (home country nationals)

expatriates from the country in which their company is headquartered.

EX: A Chinese working in the US for a Chinese company

Third-country nationals

expatriates from countries other than the home country of their company or the host country

EX: A Chinese working in France for a Russian company.

Ethnocentric

hires natives of the parent country for key positions.

polycentric

hires natives of the host country for key positions.

regiocentric

hires managers from various countries within the geographic regions

geocentric

uses best available managers without regard for their countries of origin.

Ethnocentric disadvantages:

- deprives local workers of positions

- lowers morale and productivity of local workers

- natives may not understand culture

Ethnocentric is best when...

- new technology is being introduced

- prior experience is important

- undeveloped countries need someone to train and develop the employees.

(may benefit the less developed country)

Polycentric Advantages:

- local manage where they are prepared

- more economic-readily available and less expensive

- helpful in politically sensitive situations

- allows for continuity of management

Polycentric Disadvantages

- cultural gap between subsidiary manager and headquarter managers

- limited opportunities for advancement

- company decision makers have little international experience

Regiocentric Advantage:

adaptable to fit company and product strategies

regiocentric disadvantages:

- managers from the region may not understand the view of managers at headquarters

- corporate headquarters may not employ enough managers with international experience.

geocentric advantages:

- worldwide strategy of business integration

- allows development of international managers

-reduces national bias.

geocentric disadvantages:

- expensive to implement such as training employees and relocation expenses.

- approval for non natives to work is difficult in some countries

- most governments want hires from the host country

Employment forecasting

estimating in advance the types and numbers of employees needed

Supply Analysis

determining if there are sufficient types and numbers of employees available

job description document includes:

1. job identification

2. job statement

3. job duties

4. responsibilities

5. job specifications

6. requirements

When recruiting...

1. announce the job

2. post the job

3. circulate within the company first (internal hire)

4. circulate the job outside the company

3 major factors of selection:

1. competence

2. adaptability

3. personal characteristics

When selecting qualified employees...

pick the best applicant (person with the highest potential to meet job expectation, must meet 3 major factors of selection)

Competence

the ability to perform

Dimensions: Technical Knowledge

Experience

Leadership/Management Skills

Collaboration

Understanding of culture

Adaptability

ability to adjust to different conditions and understanding of others.

(relative to feelings, thoughts, and attitudes of others.)

Personal characteristics include:

maturity, education, gender, social acceptability, diplomacy, health, and family.

T or F: Is training and development critical?

True

Job Related Training:

Economic

Legal

Political

Company

Cross Cultural Training:

Cross-Cultural Training

Currency

Foods/Costs

Housing

Why do global employees fail?

- unable to adjust

- emotional maturity

- lack of motivation

- can't work productively

- can't accept new responsibilities.

How can they reduce the chance of employee failure?

- pick good and successful employees

- provide good training

- give good communication

Base Salary

maintains customary standard of living of employee and their family while living abroad.

expatriate bonus

paying premium to persuade an employee to work abroad

Cost-of-living adjustment

basic living costs vary greatly around the world (this adjusts to their costs)

EX: it might cost more to live in another country so the company will pay more in order for the employees to live there.

Employee benefits

fringe benefits. such as for education, medical, taxes, etc.

What are 3 influencing factors of employee performances?

1. environment

2. task

3. personality

ethnocentric approach

parent country nationals set and administer evaluations

Polycentric approach

host country nationals set and administer evaluations

Problems that can occur with employee performance:

1. misunderstandings.

2. threats, insults, lack of trust

What should employees do to plan ahead before going to another country?

1. They can learn the language (read books, online, dictionary, etc.)

2. plan clothes accordingly (hot summers dont bring puffer jackets, cold winters dont bring tshirts, etc)

What is culture shock?

The feelings a person experiences when placed in a different culture (nervous, not fitting in, etc.)

What is reverse culture shock?

the feelings a person faces when they come home after working abroad. (such as not fitting in, etc.)

What can you do to prevent culture shock?

Plan accordingly and ahead. Do some research to make sure you understand the culture, that way it isn't surprising when you actually go. (of course that doesn't mean you won't get culture shock it just means chances are lower.)

Entrepreneurs

Risk taker who operates a business.

Economic and social benefits of small businesses:

- Creators of new products

- Major source of jobs

- Provide Personal Service

- Brings together resources needed for a company to get started

Small Business

independently owned and operated business that does not dominate an industry.

Types of Entrepreneurial Business:

1. Agriculture, Mining, and Extracting

2. Manufacturing Companies

3. Wholesalers (Intermediaries) - Buys from manufacturer and sells to other businesses. Ship products to retailers.

4. Retailers - sells directly to consumers

5. Service Companies - sell to consumers and to businesses

Future Growth for Small Business Entrepreneurs:

1. health care services

2. retailing and food-service companies

3. environmental business

4. training and education

5. personal services (child care, financial planning, entertainment, recreation)

6. commercial services

Home-Based Businesses

1. due to technology

2. over 5 million in US, 2 million in Canada

telecommuting benefits:

1. Businesses save money-less office space

2. Retain talented employees

3. Workers save time and energy from travel

Self Employment advantages:

- independence

- pride of ownership

- feeling of accomplishment

- confidence

- satisfaction

Self Employment Disadvantages:

- time commitment

- uncertain income

- possible loss of investment

- burn-out

Successful Entrepreneur qualities:

- risk taker

- self confident

- hard working

- experienced

- enjoyment

- creative

- business knowledge

- goal oriented

- desire for adventure

SMART GOALS:

S- specific

M- measurable

A- agreed upon

R- realistic

T- time constrained

SMART GOAL EXAMPLE:

I want to be raise my grade by 5% by the end of this semseter.

What is a business plan used for?

1. to attract new investors

2. a blueprint for company activites

Major activities of every business:

- Marketing

- Finance

- Production

- Human Resources

- Information Systems

Parts of a Business Plan:

1. business description

2. organizational structure

3. marketing activities

4. financial planning

5. production activities

6. human resource activies

7. information needs

Budget

a financial tool that estimates a company's funds and its plan for spending those funds.

What are the three types of Analyze Costs?

1. Start-up Costs

2. Variable Costs

3. Fixed Costs

Start-up Costs

Continuing expenses-on-going

Variable Costs

Change in proportion to the level of production

Fixed Costs

DO NOT CHANGE.

What is a breakeven point?

number of units a business must sell to make a profit of zero.

Loss

sales below breakeven point

Profit

Sales above breakeven point

Gross Profit

difference between the cost of an item and the price for which the business can sell the item.

2 Sources of Funds

Equity Funds and Debt Funds

Equity Funds

Business Funds obtained from the owners of a business.

Debt Funds

Business funds obtained by borrowing

Cash Flow

inflow and outflow of cash

What is inflows from?

sales

Outflows

operating expenses

Cash Flow Statement

Reports current sources and amounts of cash inflows and outflows.

Production management

factors of production are combines to create goods and services

EX: Extracting, Wholesaler, Retailer, Consumer.

Human Resources Management Labor

most important factor of production

EX: hire needed employees, train employees, reward, recognize, retain, etc.

Information Management

Identify information needs

Obtain the information

Organize the information

Distribute Reports

Update Data Files as needed

A business sells 1,000 printers for $150,000. If the printers costed $90 each, what is the total gross profit?

$150,000 - ($90 x 1,000 printers) = $60,000

If the fixed costs total is $500,000 and the gross profit on each unit of sales is $20, how many units must the company sell before it begins to earn a profit?

$500,000/20=25,000

A business has total fixed costs of $200,000, and it sells its product for $1,000 but it costs $600 to manufacture each unit. How many units must the company sell to break even?

Gross Profit per unit: $1,000-$600=$400

$200,000/$400= 500 units

A company's balance sheet shows assets of $500,000 and liabilities of $300,000. What is the company's owner's equity?

$500,000-$300,000 = $200,000 Owner's Equity

A company wants to make a profit of $20,000. It has a fixed cost of $100,000, a unit selling price of $20 and a unit cost of $10. How many units must it sell?

Gross Profit per unit: $20-$10 = $10

Breakeven point: $100,000/$10 gross profit = 10,000 units

$20,000 profit/$10 unit costs = 2,000 units

10,000 breakeven units + 2,000 units = 12,000 units sold to make profit of $20,000

A company has cash flow of 1,500,000, sales revenue of 1,000,000, and operating expenses of $845,000. What is the company's profit?

1,000,000 sales revenue - $845,000 operating expenses = $155,000 profit

Managers

People in charge of organizations and their resources; Assume responsibility for the administration of an organization

Characteristics of Managers Include:

- Leadership

- Communication

- Self-aware

- Ability to plan/organize, delegate,

be objective, adapt to change

- Gather and analyze information to solve problems

Leadership

The ability to get others to follow

Communication

Strong writing, reading listening, speaking and presenting skills

Self-Aware

Know their strengths and weaknesses and those of others

Styles of Managers

* Autocratic

* Participative

* Free-reign

No one's style is perfect in all situations

Autocratic

Centralized authority; maximizes power/authority; assumes full responsibility

Maximize power/authority

Control others

Centralized authority

Tell others what to do

Positive power

Rewards for compliance

Negative power

Employees feel uninformed, insecure and afraid

Participative

Decentralized power; Balance power and authority between them and employees; Work together to achieve goals. Keep employees informed; Encourages sharing of ideas

Decentralized power

Power is shared amongst employees

Free-reign

Minimize power/authority to control others; Employees establish goals and monitor their own progress; Use only when employees are self-disciplined and self-motivated

Influences of Cultural Difference

* Participation in making decisions

* Hiring preferences

* Permanence of Employment

* Labor-Management Relationships

Participation in making decisions

Some want to participate, others do not

- IE: US likes to participate; Venezuela does not like to be a part of decision making

Hiring Preferences

US- Values job-related qualifications

Venezuela- Values family and friends above qualifications

Permanence of Employment

US - Lay off during economic downturns. Look for other jobs

Japanese - Until recently, expected lifetime employment from a company