International Business: The Challenges of Globalization, 9e, Global Edition (Wild)

Chapter 16 Hiring and Managing Employees

1) The customary means by which a company fills up vacancies in its offices is called ________.
A) a staffing policy
B) an employment policy
C) onboarding
D) outsourcing
Answer: A
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.1: Explain the three types of staffing policies that companies use.

2) Which of the following is an appropriate and widely-used method for staffing international
business operations?
A) collective narcissism
B) cronyism
C) nepotism
D) geocentric approach
Answer: D
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.1: Explain the three types of staffing policies that companies use.

3) Firms using a(n) ________ primarily use parent country nationals to staff higher-level foreign
positions.
A) ethnocentric staffing model
B) polycentric staffing model
C) geocentric staffing model
D) monocentric staffing model
Answer: A
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.1: Explain the three types of staffing policies that companies use.

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4) Hyundai tends to follow an ethnocentric staffing model. From which group will it most likely
hire for upper-level management positions?
A) parent country nationals
B) host country nationals
C) third country nationals
D) primary country nationals
Answer: A
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

5) CADE International, a MNC, typically fills high-level foreign positions with host country
nationals. Which staffing model is most likely used by CADE International?
A) ethnocentric staffing model
B) polycentric staffing model
C) geocentric staffing model
D) monocentric staffing model
Answer: B
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.1: Explain the three types of staffing policies that companies use.

6) Which of the following statements regarding ethnocentric staffing is true?

A) It can facilitate the transfer of special know-how.
B) It is a relatively inexpensive policy to implement.
C) It allows a company to "blend in" with the local market.
D) It is a good choice for companies operating in highly nationalistic markets.
Answer: A
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

7) Which of the following is a major drawback of ethnocentric staffing?

A) high costs of relocating managers
B) loss of control over host-country operations
C) loss of control over home-country operations
D) difficulty in the transfer of special know-how between branches
Answer: A
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

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8) A(n) ________ manager champions the ways of foreign markets as comparable, if not more
enlightened, than the practices of his or her parent company and home nation.
A) ethnocentric
B) geocentric
C) monocentric
D) polycentric
Answer: D
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.1: Explain the three types of staffing policies that companies use.

9) A ________ policy would give the foreign units of a company a degree of autonomy in
decision-making.
A) centralized production
B) vertical integration
C) mass customization
D) polycentric staffing
Answer: D
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.1: Explain the three types of staffing policies that companies use.

10) An important advantage of polycentric staffing is that it ________.

A) re-creates local operations in the image of home-country operations
B) eliminates the high cost of relocating expatriate managers and their families
C) helps a company develop global managers who can adjust easily to any business environment
D) employs managers from home who will look out for the company's interests
Answer: B
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

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11) Which of the following is a drawback of the polycentric approach?
A) Host-country nationals become more committed to company headquarters than to their local
colleagues.
B) Successful local units may increasingly function independently and pay less attention to
headquarters.
C) Local units depend too much on headquarters for resources and innovations, with little
incentive to develop their own.
D) Local managers study international business and cultural practices in other markets in
preparation for international assignments at the expense of not fully investing in understanding
the host country.
Answer: B
AACSB: Analytical thinking; Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

12) A company that hires the best-qualified individuals, regardless of nationality, to manage
foreign operations is utilizing a(n) ________ approach.
A) horizontal integration
B) geocentric staffing
C) ethnocentric staffing
D) vertical integration
Answer: B
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.1: Explain the three types of staffing policies that companies use.

13) Which of the following statements is true of geocentric staffing?

A) It reduces the high cost of relocating expatriate managers and their families.
B) It employs managers exclusively from the home country to look out for the company's
interests.
C) It helps develop global managers who can adjust to any business environment.
D) It emphasizes on re-creating local operations in the image of home-country operations.
Answer: C
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

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14) Firms using a geocentric staffing model are primarily concerned with ________.
A) ensuring that home office views and policies are maintained
B) gaining support and assistance from local communities
C) hiring the best person available regardless of nationality
D) employing local managers with technical expertise
Answer: C
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.1: Explain the three types of staffing policies that companies use.

15) The major disadvantage of a geocentric staffing policy is its potential for ________.
A) creating barriers for the host-country office
B) being costly due to high salaries and moving costs of managers
C) creating legal problems for the home-country office
D) losing control of host-country operations
Answer: B
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

Scenario: Swingset International

Jerome Johnston, the human resource manager at the U.S.-based Swingset International, is
developing an international staffing policy for the company. Jerome personally believes
Swingset should send managers from the United States to manage each subsidiary. But the CEO
of the company, Valerie Vermont, believes subsidiary operations ought to be managed by
individuals from the host country.

16) The approach recommended by Jerome is called ________.

A) vertical integration
B) ethnocentric staffing
C) horizontal integration
D) geocentric staffing
Answer: B
AACSB: Analytical thinking
Skill: Application
Difficulty: Hard
LO: 16.1: Explain the three types of staffing policies that companies use.

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17) The approach recommended by Valerie is called ________.
A) polycentric staffing
B) ethnocentric staffing
C) vertical integration
D) horizontal integration
Answer: A
AACSB: Analytical thinking
Skill: Application
Difficulty: Hard
LO: 16.1: Explain the three types of staffing policies that companies use.

18) Which staffing policy should Swingset consider if it wants its foreign operations to be
managed by the best-qualified individuals regardless of nationality?
A) nepotism
B) ethnocentric staffing
C) geocentric staffing
D) employee referrals
Answer: C
AACSB: Analytical thinking
Skill: Application
Difficulty: Hard
LO: 16.1: Explain the three types of staffing policies that companies use.

19) The process of staffing a company and ensuring employees are as productive as possible is
called human resource management.
Answer: TRUE
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.1: Explain the three types of staffing policies that companies use.

20) Citizens who are working and living in their home country are called expatriates.
Answer: FALSE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.1: Explain the three types of staffing policies that companies use.

21) Companies use ethnocentric staffing to re-create local operations in the image of home-
country operations.
Answer: TRUE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

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22) A polycentric staffing strategy can facilitate the transfer of special know-how to branch
operations.
Answer: FALSE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

23) In ethnocentric staffing, operations outside the home country are managed by individuals
from the host country.
Answer: FALSE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.1: Explain the three types of staffing policies that companies use.

24) Ethnocentric staffing places managerial responsibility in the hands of people intimately
familiar with the local business environment.
Answer: FALSE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

25) The major drawback of polycentric staffing is the potential for losing control of the host-
country operation.
Answer: TRUE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

26) In geocentric staffing, operations outside the home country are managed by the best-qualified
individuals, regardless of their nationality.
Answer: TRUE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.1: Explain the three types of staffing policies that companies use.

27) An ethnocentric policy can create barriers for the host-country office.
Answer: TRUE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

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28) A major drawback of geocentric staffing is that it is expensive.
Answer: TRUE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

29) The first phase of HR planning involves taking an inventory of a company's current human
resources.
Answer: TRUE
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.1: Explain the three types of staffing policies that companies use.

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30) Differentiate between the three types of staffing policies used by international companies.
What are the advantages of each?
Answer:
Ethnocentric staffing—In ethnocentric staffing, individuals from the home country manage
operations abroad. This policy tends to appeal to companies that want to maintain tight control
over decision making in branch offices abroad. Accordingly, those companies work to formulate
policies designed to work in every country in which they operate. But firms generally pursue this
policy in their international operations for top managerial posts—implementing it at lower levels
is often impractical.
Advantages—Firms pursue this policy for several reasons. First, locally qualified people are not
always available. In developing and newly industrialized countries, there is often a shortage of
qualified personnel that creates a highly competitive local labor market. Second, companies use
ethnocentric staffing to re-create local operations in the image of home-country operations.
Especially if they have climbed the corporate ladder in the home office, expatriate managers tend
to infuse branch offices with the corporate culture. This policy is important for companies that
need a strong set of shared values among the people in each international office—such as firms
implementing global strategies. A system of shared values is important when a company's
international units are highly interdependent. Finally, some companies feel that managers sent
from the home country will look out for the company's interests more earnestly than will host-
country natives.
Polycentric staffing—In polycentric staffing, individuals from the host country manage
operations abroad. Companies can implement a polycentric approach for top and mid-level
managers, for lower-level staff, or for non-managerial workers. It is well suited to companies
who want to give national units a degree of autonomy in decision making. This policy does not
mean that host-country managers are left to run operations in any way they see fit. Large
international companies usually conduct extensive training programs in which host-country
managers visit home offices for extended periods. This exposes them to the company's culture
and specific business practices. Small and medium-sized companies can find this policy
expensive, but being able to depend on local managers who fully understand what is expected of
them can far outweigh any costs.
Advantages—Polycentric staffing places managerial responsibility in the hands of people
intimately familiar with the local business environment. Managers with deep cultural
understanding of the local market can be an enormous advantage. They are familiar with local
business practices and can read the subtle cues of both verbal and nonverbal language. They need
not overcome any cultural barriers created by an image of being an outsider, and they tend to
have a better feel for the needs of employees, customers, and suppliers.
Another important advantage of polycentric staffing is elimination of the high cost of relocating
expatriate managers and families. This benefit can be extremely helpful for small and medium-
sized businesses that cannot afford the expenses associated with expatriate employees.
Geocentric Staffing—In geocentric staffing, the best-qualified individuals, regardless of
nationality, manage operations abroad. The local operation may choose managers from the host
country, from the home country, or from a third country. The choice depends on the operation's
specific needs. This policy is typically reserved for top-level managers.
Advantages—Geocentric staffing helps a company develop global managers who can adjust
easily to any business environment—particularly to cultural differences. This advantage is
especially useful for global companies trying to break down nationalistic barriers, whether
between managers in a single office or between different offices. One hope of companies using
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this policy is that a global perspective among its managers will help them seize opportunities that
may otherwise be overlooked.
AACSB: Analytical thinking; Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.1: Explain the three types of staffing policies that companies use.

31) Discuss the disadvantages of an ethnocentric staffing policy. How do bonuses, tax incentives,
and employee expectations contribute to high personnel costs?
Answer: Despite its advantages, ethnocentric staffing has its negative aspects. First, relocating
managers from the home country is expensive. The bonuses that managers often receive for
relocating plus relocation expenses for entire families can increase the cost of a manager several
times over. Likewise, the pressure of cultural differences and long periods away from relatives
and friends can contribute to the failure of managers on international assignments.
Second, an ethnocentric policy can create barriers for the host-country office. The presence of
home-country managers in the host country might encourage a "foreign" image of the business.
Lower-level employees might feel that managers do not really understand their needs because
they come from another culture. Occasionally they are right: Expatriate managers sometimes fail
to integrate themselves into the local culture. And if they fail to overcome cultural barriers, they
typically fail to understand the needs of their local employees and those of their local customers.
Bonuses, tax incentives and cultural and social expectations can contribute to high personnel
costs. Companies commonly offer managers inducements to accept international postings. The
most common is a financial bonus. This bonus can be in the form of a one-time payment or an
add-on to regular pay—generally 15 to 20 percent. Bonuses for managers who are asked to go
into a particularly unstable country or one with a very low standard of living often receive
hardship pay.
Managers can also be attracted by another income-related factor. For example, the U.S.
government permits citizens working abroad to exclude $82,000 of "foreign-earned income"
from their taxable income in the United States—even if it was earned in a country with no
income tax. But earnings over that amount are subject to income tax, as are employee benefits
such as free housing.
Culture also plays an important role in the compensation of expatriate managers. Some nations
offer more paid holidays than others. Many offer free medical care to everyone living and
working there. Granted, the quality of locally available medical care is not always good. Many
companies, therefore, have plans to take seriously ill expatriates and family members home or to
nearby countries where medical care is equal to that available in the home country.
Companies that hire managers in the local market might encounter additional costs engendered
by social attitudes. For instance, in some countries employers are expected to provide free or
subsidized housing. In others the government obliges employers to provide paid maternity leaves
of up to one and a half years. Government-mandated maternity leaves vary significantly across
European countries. Although not all such costs need to be absorbed by companies, they do tend
to raise a country's cost of doing business.
AACSB: Diverse and multicultural work environments
Skill: Synthesis
Difficulty: Hard
LO: 16.1: Explain the three types of staffing policies that companies use.

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32) Citizens of one country who are living and working in another are called ________.
A) local employees
B) domicile residents
C) repatriates
D) expatriates
Answer: D
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

33) CADE International, an MNC, adheres to an ethnocentric staffing approach when filling
senior-level positions for its foreign locations. As a result, CADE most likely devotes significant
resources to ________.
A) distributing products
B) building effective supply chains
C) selecting and training expatriate managers
D) determining compensation for local employees
Answer: C
AACSB: Analytical thinking; Diverse and multicultural work environments
Skill: Application
Difficulty: Hard
LO: 16.2: Describe the key human resource recruitment and selection issues.

34) The process of forecasting both a company's human resource needs and its supply is called
________.
A) human resource planning
B) human resource accounting
C) recruitment
D) selection
Answer: A
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

35) Which of the following is the first phase of human resource planning?
A) developing a plan to recruit and select people to fill vacant and anticipated new positions
B) estimating the company's future human resource needs
C) taking an inventory of the company's current human resources
D) promoting employees to positions of greater responsibility
Answer: C
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

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36) Which of the following phases of human resource planning involves decruitment?
A) normally occurs when a company decides to discontinue manufacturing or selling in a
market.
B) estimating the company's future human resource needs
C) taking an inventory of the company's current human resources
D) promoting employees to positions of greater responsibility
Answer: A
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

37) Planning for decruitment normally occurs when a company ________.

A) discontinues manufacturing or selling in a market
B) finds that current HR levels are lesser than anticipated needs
C) plans to establish multiple foreign subsidiaries
D) hires new executive leadership to implement a growth strategy
Answer: A
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

38) Which of the following terms is defined as the process of identifying and attracting a
qualified pool of applicants for vacant positions?
A) orientation
B) outsourcing
C) recruitment
D) selection
Answer: C
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

39) To help speed up the process of getting approvals for local operations, a firm would most
likely benefit from hiring ________.
A) home-country managers from the company's headquarters
B) managerial talent from the host country
C) recent college graduates trained in the home country
D) third-country expatriates with extensive experience in the field
Answer: B
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.2: Describe the key human resource recruitment and selection issues.

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40) ________ would most likely be recruited for non-managerial positions at foreign subsidiaries
that do not require specialized skills.
A) Recent graduates from colleges in the home country
B) Home-country specialists
C) Workers from the local host-country market
D) Current employees from the company headquarters
Answer: C
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

41) Companies typically recruit ________ to train individuals placed in more demanding non-
managerial positions at foreign branches.
A) workers from the local market
B) recent college graduates from the host country
C) qualified third-party nationals
D) specialists from the home country
Answer: D
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

42) The process of screening and hiring the best-qualified applicants with the greatest
performance potential is called ________.
A) performance appraisal
B) orientation
C) recruitment
D) selection
Answer: D
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

43) ________ is the early return of an expatriate manager to the home country because of an
inability to perform in the overseas assignment.
A) Culture shock
B) Expatriate return
C) Expatriate failure
D) Managerial incompetence
Answer: C
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.
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44) The psychological process of readapting to one's home culture after working in a host-
country culture is called ________.
A) social loafing
B) assimilation effect
C) reverse culture shock
D) expatriate failure
Answer: C
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

45) An expatriate manager who returns after a few years from an overseas assignment to find
that there is no position for him in his home country office experiences a(n) ________.
A) reverse culture shock
B) expatriate failure
C) cognitive dissonance
D) assimilation effect
Answer: A
AACSB: Analytical thinking
Skill: Application
Difficulty: Hard
LO: 16.2: Describe the key human resource recruitment and selection issues.

46) ________ is a psychological phenomenon that may lead to feelings of fear, helplessness,
irritability, and disorientation.
A) Expatriate failure
B) Repatriation
C) Culture shock
D) Depression
Answer: C
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

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47) John has been transferred to an office in Japan for a year. In his first few weeks, he began to
feel confused and rejected as well as a sort of mourning for home. John is experiencing
________.
A) expatriate failure
B) repatriation
C) acculturation
D) culture shock
Answer: D
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

48) Which of the following is most likely to occur in the honeymoon stage of culture shock?
A) New arrivals are fascinated by aspects of the new culture.
B) Individuals become annoyed by unpredictable quirks of the new culture.
C) Emotions hit rock bottom for visitors.
D) Visitors better understand and appreciate local customs and behavior.
Answer: A
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

Scenario: You're Hired!

Erica Els has just been promoted as vice president of human resources for Hudson Foods, a U.S.-
based international frozen food corporation. Erica's first task is to staff the company's European
subsidiary.

49) One challenge facing Hudson Foods as it expands into Europe is getting through all the
bureaucratic and legal regulations surrounding the food industry. Erica plans to hire a manager to
ensure that this challenge is overcome. Who among the following will Erica most likely recruit
for this position?
A) a local manager with strong government contacts
B) an experienced manager from the Hudson Foods U.S. headquarters
C) a native of the target market who is a recent U.S. college graduate
D) a candidate from the U.S. with extensive management experience in the frozen food industry
Answer: A
AACSB: Analytical thinking
Skill: Application
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

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50) The new subsidiary's production facilities will employ approximately 100 full-time
nonmanagerial workers. Who among the following will Erica most likely recruit to fill these
positions?
A) highly productive workers relocated from developing nations
B) bilingual U.S. citizens who speak the language of the host country
C) qualified workers from the local market
D) workers from the American headquarters who are interested in gaining international
experience
Answer: C
AACSB: Analytical thinking
Skill: Application
Difficulty: Hard
LO: 16.2: Describe the key human resource recruitment and selection issues.

51) Culture shock affects an expatriate's job satisfaction level but does not tend to affect his or
her effectiveness and productivity at work.
Answer: FALSE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

52) The process of reducing the size of an organization's workforce is called decruitment.
Answer: TRUE
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

53) The process of recruitment involves screening and hiring the best-qualified applicants with
the greatest performance potential.
Answer: FALSE
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

54) To speed up the process of getting government approval for local operations, companies
must hire home country nationals.
Answer: FALSE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.2: Describe the key human resource recruitment and selection issues.

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55) Companies typically recruit locally for non-managerial positions.
Answer: TRUE
AACSB: Application of knowledge; Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

56) The process of identifying and attracting a qualified pool of applicants for vacant positions is
called recruiting.
Answer: TRUE
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

57) Reverse culture shock is the trouble expatriates face while adjusting to a new environment in
which they find themselves.
Answer: FALSE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

58) Having the freedom to choose whether to accept or reject an expatriate assignment increases
the likelihood a manager will be successful at the assignment.
Answer: TRUE
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

59) Expatriate failure refers to an employee's early return from an international assignment
because of inadequate job performance.
Answer: TRUE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.2: Describe the key human resource recruitment and selection issues.

60) The psychological process of readapting to one's home culture is seldom difficult for
expatriates who have successfully adapted to new cultures.
Answer: FALSE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.2: Describe the key human resource recruitment and selection issues.

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61) Reverse culture shock is much milder than the initial culture shock an expatriate faces.
Answer: FALSE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.2: Describe the key human resource recruitment and selection issues.

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62) Describe the differences between human resource management in a domestic setting and an
international setting, and explain the three phases of human resources planning.
Answer: Human resource management (HRM) is the process of staffing a company and
ensuring that employees are as productive as possible. It requires managers to be effective in
recruiting, selecting, training, developing, evaluating, and compensating employees and in
forming good relationships with them.
International HRM differs considerably from HRM in a domestic setting because of differences
in national business environments. There are concerns over the employment of expatriates—
citizens of one country who are living and working in another. Companies must deal with many
issues when they have expatriate employees on job assignments that could last several years.
Some of these issues are related to the inconvenience and stress of living in an unfamiliar
culture.
Training and development programs must often be tailored to local practices. Some countries,
such as Germany and Japan, have extensive vocational-training schools that turn out graduates
ready to perform their jobs proficiently. Finding well-qualified nonmanagerial workers in those
markets is relatively easy. By contrast, developing a production facility in many emerging
markets requires far more basic training of workers. For example, workers in China work hard
and tend to be well educated. But because China lacks an advanced vocational training system
like those in Germany and Japan, Chinese workers tend to require more intensive on-the-job
training. Recruitment and selection practices must also be adapted to the host nation's hiring
laws. Hiring practices regarding nondiscrimination among job candidates must be carefully
monitored so that the company does not violate such laws. And companies that go abroad to
lower labor expenses then adjust pay scales and advancement criteria to suit local customs.
Recruiting and selecting managers and workers requires human resource planning—the process
of forecasting a company's human resource needs and its supply. The first phase of HR planning
involves taking an inventory of a company's current human resources—that is, collecting data on
every employee, including educational background, special job skills, previous jobs, language
skills, and experience living abroad.
The second phase of HR planning is estimating the company's future HR needs. For example,
consider a firm that plans to sell its products directly to buyers in a new market abroad.
Likewise, manufacturing or assembling products in an international market requires factory
workers. A company must decide whether to hire these people itself or to subcontract production
to other producers—thus eliminating the need for it to hire factory workers.
In the third phase of HR planning, managers develop a plan for recruiting and selecting people to
fill vacant and anticipated new positions, both managerial and nonmanagerial. Sometimes, a firm
must also make plans for reducing its workforce—a process called decruitment—when current
HR levels are greater than anticipated needs. Planning for decruitment normally occurs when a
company decides to discontinue manufacturing or selling in a market. Unfortunately, the
decision by global companies to shift the location of manufacturing from one country to another
can also result in lost jobs.
AACSB: Application of knowledge; Diverse and multicultural work environments
Skill: Synthesis
Difficulty: Hard
LO: 16.2: Describe the key human resource recruitment and selection issues.

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63) Explain why a person's ability to bridge cultural differences must be considered during
"selection" for international assignments. How can e-Training help in bridging cultural
differences?
Answer: The process of screening and hiring the best-qualified applicants with the greatest
performance potential is called selection. The process for international assignments includes
measuring a person's ability to bridge cultural differences. Expatriate managers must be able to
adapt to a new way of life in the host country. Conversely, native host-country managers must be
able to work effectively with superiors who have different cultural backgrounds.
In the case of expatriate managers, cultural differences between home country and host country
are important factors in their potential success. Culturally sensitive managers increase the
likelihood that a company will achieve its international business goals. Recruiters can assess
cultural sensitivity by asking candidates questions about their receptiveness to new ways of
doing things and questions about racial and ethnic issues. They can also use global aptitude tests.
It is also important to examine the cultural sensitivity of each family member who will be going
to the host country. The ability of a family member to adapt to a new culture can be a key factor
in the success or failure of an expatriate manager.
Some of the many costs of relocating an employee for a long-term international assignment
include moving expenses and ongoing costs for things such as housing, education, and cost-of-
living adjustments. That is why many companies realize the need for in-depth training and
development programs if they are to get the maximum productivity from managers posted
abroad.
As companies increasingly reach out to the world to obtain services, they are turning to online
training (e-Training) programs that teach skills immediately relevant to employees' jobs. These
include administrative training, human resources training, compliance training, and frontline
issues such as the consumer benefits of a new product. The appeal of e-Training to international
companies is its consistency: e-Training delivers a consistent message in the same way to an
infinite number of employees. By contrast, employees receiving other types of training in diverse
settings worldwide can go away with many different perceptions or biases. Workplace eTraining
is not perfect: it can be difficult to engage people online and to teach soft skills, such as
appropriate facial expressions and tone of voice. But its ability to flexibly train large groups cost-
effectively makes it a viable alternative to traditional training methods.
AACSB: Diverse and multicultural work environments
Skill: Synthesis
Difficulty: Hard
LO: 16.2: Describe the key human resource recruitment and selection issues.

64) Which of the following constitutes the most basic level of training to prepare managers for
international assignments?
A) environmental briefings
B) language training
C) cultural assimilation
D) field experience
Answer: A
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.
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65) A manager could most likely gain information on a local area's housing, health care,
transportation, schools, and climate by participating in ________.
A) language training
B) environmental briefings
C) field experience
D) sensitivity training
Answer: B
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.

66) Which of the following offers insight into a host country's political, legal, economic, and
social institutions as a way of enhancing environmental briefings?
A) language training
B) field experience
C) sensitivity training
D) cultural orientation
Answer: D
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.

67) Which of the following is the correct order of the different methods of cultural training from
the least advanced to the most advanced?
A) environmental briefings; language training; cultural orientations
B) cultural orientations; field experience; language training
C) cultural assimilation; language training; field experience
D) sensitivity training; cultural orientations; field experience
Answer: C
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.

68) ________ teaches an expatriate a culture's values, attitudes, manners, and customs.
A) Cultural assimilation
B) Cultural orientation
C) Language training
D) Cultural environmentalism
Answer: A
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.
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69) Which of the following methods of cultural training involves the use of guerilla linguistics?
A) cultural orientation
B) language training
C) cultural assimilation
D) cultural narcissism
Answer: C
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.

70) Which of the following trains managers to be considerate and understanding of other
people's feelings and emotions?
A) cultural orientation
B) sensitivity training
C) language training
D) cultural narcissism
Answer: B
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.

71) Which of the following training approaches involve employees visiting another culture,
walking the streets of its cities and villages, and becoming absorbed by the culture for a short
time?
A) language training
B) field experience
C) sensitivity training
D) cultural orientation
Answer: B
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.

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72) Which of the following international assignment preparation methods involves a trainee
feeling the stresses inherent in living in the culture?
A) language training
B) field experience
C) sensitivity training
D) cultural orientation
Answer: B
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.

Scenario: Gem Jewels

Gem Jewels recently established a number of subsidiaries in various foreign countries aiming to
build high levels of international business involvement in the coming years. Cultural training has
to be given by the company to home-country managers assigned to work in the new subsidiaries.

73) The most basic level of training that can be given to the managers is ________.
A) language training
B) field experience
C) sensitivity training
D) environmental briefings
Answer: D
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.

74) If Gem Jewels wants its employees to get "under the skin" of the local people, it should
provide ________.
A) language training
B) sensitivity training
C) cultural orientations
D) field experience
Answer: B
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.

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75) If Gem Jewels wants its employees to get "into the minds" of the local people, it should
provide ________.
A) language training
B) sensitivity training
C) cultural orientations
D) environmental briefings
Answer: A
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.

76) To teach its employees the values, attitudes, manners, and customs of the host-country
culture, Gem Jewels should offer ________.
A) language training
B) environmental briefings
C) cultural assimilation
D) field experience
Answer: C
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.

Scenario: Mr. Yoshimura Goes to Tennessee

Mr. Yoshimura, vice president of quality control at Oshimura Yarn, has recently been assigned
to a three-year project at the company's Tennessee plant. Mr. Yoshimura has brought his wife
and his three daughters with him from Yokohama to Tennessee.

77) Mr. Yoshimura and his family were initially very excited to see Tennessee but soon started
missing their home, relatives and friends in Japan. They are facing ________.
A) culture shock
B) reverse culture shock
C) expatriate failure
D) cultural cringe
Answer: A
AACSB: Diverse and multicultural work environments
Skill: Application
Difficulty: Hard
LO: 16.3: Summarize the main training and development programs that firms use.

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78) Mr. Yoshimura's daughters are extremely unhappy and have been complaining every night
about their lifestyle in the United States. They insist on returning to Japan. If Mr. Yoshimura
gives in to his family members' pleas and decides to return home, which of the following will
most likely be true about his experience?
A) He and his family will experience reverse culture shock.
B) He will leave his company within one year of returning home.
C) His case will represent an instance of expatriate failure.
D) He will be terminated from employment for failing to complete his assignment.
Answer: C
AACSB: Diverse and multicultural work environments
Skill: Application
Difficulty: Hard
LO: 16.3: Summarize the main training and development programs that firms use.

79) If the family finds it difficult to adjust on returning to Japan after three years, they will
experience ________.
A) social loafing
B) reverse culture shock
C) expatriate failure
D) halo effect
Answer: B
AACSB: Diverse and multicultural work environments
Skill: Application
Difficulty: Hard
LO: 16.3: Summarize the main training and development programs that firms use.

Scenario: You're Hired!

Erica Els has just been promoted as vice president of human resources for Hudson Foods, a U.S.-
based international frozen food corporation. Erica's first task is to staff the company's European
subsidiary.

80) One lower-level position Erica must fill requires the employee to be familiar with the new
market and its customs, traditions, and language. Also, the new hire must be comfortable with
Hudson Food's organizational culture and business traditions. Who among the following will
Erica most likely recruit for this position?
A) a local fresher with strong government contacts
B) an existing Hudson Foods employee from the United States
C) a native of the target market who has completed a one-year internship at Hudson Foods
D) an individual from the U.S. who has experience in the frozen food industry
Answer: C
AACSB: Diverse and multicultural work environments
Skill: Application
Difficulty: Hard
LO: 16.3: Summarize the main training and development programs that firms use.

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81) Guerrilla linguistics is often used in the cultural assimilation stage.
Answer: TRUE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.

82) Sensitivity training constitutes the most basic level of cultural training for managers on
international assignments.
Answer: FALSE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.3: Summarize the main training and development programs that firms use.

83) Training local workers on how to work on an assembly line is an example of cultural
assimilation.
Answer: FALSE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.3: Summarize the main training and development programs that firms use.

26
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84) Explain the advantages and disadvantages of a geocentric staffing policy, and discuss the
effects of culture shock when assigning an employee to work in another country.
Answer: In geocentric staffing, the best-qualified individuals, regardless of nationality, manage
operations abroad. The local operation may choose managers from the host country, from the
home country, or from a third country. The choice depends on the operation's specific needs.
This policy is typically reserved for top-level managers.
Geocentric staffing helps a company develop global managers who can adjust easily to any
business environment—particularly to cultural differences. This advantage is especially useful
for global companies trying to break down nationalistic barriers, whether between managers in a
single office or between different offices. One hope of companies using this policy is that a
global perspective among its managers will help them seize opportunities that may otherwise be
overlooked.
The downside of geocentric staffing is the expense. Understandably, top managers who are
capable both of fitting into different cultures and being effective at their jobs are highly prized
among international companies. The combination of high demand for their skills and their short
supply inflates their salaries. Moreover, there is the expense of relocating managers and their
families—sometimes every year or two.
Living in another culture can be a stressful experience. Selecting managers comfortable traveling
to and living in unfamiliar cultures, therefore, is an extremely important factor when recruiting
for international posts. Set down in the midst of new cultures, many expatriates experience
culture shock—a psychological process affecting people living abroad that is characterized by
homesickness, irritability, confusion, aggravation, and depression. In other words, they have
trouble adjusting to the new environment in which they find themselves. Expatriate failure—the
early return by an employee from an international assignment because of inadequate job
performance—often results from cultural stress. The higher cost of expatriate failure is
convincing many companies to invest in cultural-training programs for employees sent abroad.
AACSB: Diverse and multicultural work environments
Skill: Synthesis
Difficulty: Hard
LO: 16.3: Summarize the main training and development programs that firms use.

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85) Differentiate between culture shock and reverse culture shock. How can companies help
employees deal with such issues?
Answer: Successful international managers typically do not mind, and often enjoy, living and
working outside their native lands. In extreme cases, they might even be required to relocate
every year or so. These individuals are capable of adapting quickly to local conditions and
business practices. Such managers are becoming increasingly valuable with the emergence of
markets in Asia, Central and Eastern Europe, and Latin America. They are also helping to create
a global pool of managers who are ready and willing to go practically anywhere on short notice.
The size of this pool, however, remains limited because of the difficulties that many people
experience in relocating to unfamiliar cultures.
Living in another culture can be a stressful experience. Selecting managers comfortable traveling
to and living in unfamiliar cultures, therefore, is an extremely important factor when recruiting
for international posts. Set down in the midst of new cultures, many expatriates experience
culture shock—a psychological process affecting people living abroad that is characterized by
homesickness, irritability, confusion, aggravation, and depression. In other words, they have
trouble adjusting to the new environment in which they find themselves. Expatriate failure—the
early return by an employee from an international assignment because of inadequate job
performance—often results from cultural stress. The higher cost of expatriate failure is
convincing many companies to invest in cultural-training programs for employees sent abroad.
Ironically, expatriates who successfully adapt to new cultures often undergo an experience called
reverse culture shock—the psychological process of readapting to one's home culture. Because
values and behavior that once seemed so natural now seem so strange, reverse culture shock may
be even more disturbing than culture shock. Returning managers often find that either no
position or merely a "standby" position awaits them in the home office. Companies often do not
know how to take full advantage of the cross-cultural abilities developed by managers who have
spent several potentially valuable years abroad. It is not uncommon for expatriates to leave their
companies within a year of returning home because of difficulties blending back into the
company culture. Moreover, spouses and children often have difficulty leaving the adopted
culture and returning home.
The effects of reverse culture shock can be reduced. Home-culture reorientation programs and
career-counseling sessions for returning managers and their families can be highly effective. For
example, the employer might bring the entire family home for a short stay several weeks before
the official return. This kind of trip allows returnees to prepare for at least some of the reverse
culture shock that may await them.
Good career development programs can help companies retain valuable managers. Ideally, the
career development plan was worked out before the employee went abroad and revised before
his or her return. Some companies work with employees before they go abroad to plan career
paths of up to 20 years within the company. Mentors who have previously gone abroad and had
to adjust on returning home can also be assigned to returning managers. The mentor becomes a
confidant with whom the expatriate manager can discuss particular problems related to work,
family, and readjusting to the home culture.
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.3: Summarize the main training and development programs that firms use.

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86) ________ is the process of staffing a company and ensuring that employees are as productive
as possible.
A) Business process reengineering
B) Human resource management
C) Organizational diagnostics
D) Industrial relations
Answer: B
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.4: Explain how companies compensate managers and workers.

87) The most common inducement that companies offer managers to accept international
postings is ________.
A) fringe benefits
B) a financial bonus
C) a vacation
D) free housing
Answer: B
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.4: Explain how companies compensate managers and workers.

88) Managers who are asked to go into a particularly unstable country or one with a very low
standard of living often receive a bonus called ________.
A) hardship pay
B) performance-related pay
C) stock options
D) fringe benefits
Answer: A
AACSB: Application of knowledge; Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.4: Explain how companies compensate managers and workers.

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89) Which of the following is true of employee compensation in international companies?
A) The most common inducement that companies offer managers to accept international postings
is free accommodation.
B) Companies need not cover the costs incurred by expatriate managers if the cost of living
abroad is lower than that at home.
C) The greater mobility of labor affects the wages of non-managerial workers today.
D) Managers recruited from within the host country generally receive a much higher pay and
lower perks than managers who work for local companies.
Answer: C
AACSB: Application of knowledge; Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.4: Explain how companies compensate managers and workers.

90) The compensation of non-managerial workers is strongly influenced by increased cross-

border business investment.
Answer: TRUE
AACSB: Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.4: Explain how companies compensate managers and workers.

91) Decentralizing the decisions that directly impact workers' lives contribute to better labor—
management relations.
Answer: TRUE
AACSB: Application of knowledge
Skill: Concept
Difficulty: Moderate
LO: 16.4: Explain how companies compensate managers and workers.

92) Codetermination allows labor representatives to participate in high-level company meetings.

Answer: TRUE
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.4: Explain how companies compensate managers and workers.

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93) Compare and contrast the methods of cultural training. Is any single method better than all
the others?
Answer: Environmental Briefings and Cultural Orientations—Environmental (area) briefings
constitute the most basic level of training—often the starting point for studying other cultures.
Briefings include information on local housing, health care, transportation, schools, and climate.
Such knowledge is normally obtained from books, films, and lectures. Cultural orientations offer
insight into social, political, legal, and economic institutions. Their purpose is to add depth and
substance to environmental briefings.
Cultural Assimilation and Sensitivity Training—Cultural assimilation teaches the culture's
values, attitudes, manners, and customs. So-called guerrilla linguistics, which involves learning
some phrases in the local language, is often used at this stage. It also typically includes role-play
exercises: the trainee responds to a specific situation to be evaluated by a team of judges. This
method is often used when someone is given little notice of a short stay abroad and wishes to
take a crash course in social and business etiquette and communication. Sensitivity training
teaches people to be considerate and understanding of other people's feelings and emotions. It
gets the trainee "under the skin" of the local people.
Language Training—The need for more thorough cultural preparedness leads to intensive
language training. This level of training entails more than memorizing phrases for ordering
dinner or asking directions. It gets a trainee "into the mind" of local people. The trainee learns
more about why local people behave as they do. This is perhaps the most critical part of cultural
training for long-term assignments.
Field Experience—Field experience means visiting the culture, walking the streets of its cities
and villages, and becoming absorbed by it for a short time. The trainee gets to enjoy some of the
unique cultural traits and feel some of the stresses inherent in living in the culture. An
expatriate's spouse and children also need cultural training. Training for them is a good
investment because the alternatives—an international "commuter marriage" or expatriate
failure—are both psychologically and financially expensive options.
AACSB: Analytical thinking; Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.4: Explain how companies compensate managers and workers.

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94) Briefly explain how companies compensate managers in international markets.
Answer: Compensation packages for managers differ from company to company and from
country to country. Good packages are fairly complicated to design, for several reasons. If the
effect of cost of living is considered, which includes factors such as the cost of groceries, dining
out, clothing, housing, schooling, health care, transportation, and utilities, it can be assumed that
it costs more to live in some countries than in others. Moreover, within a given country, the cost
of living typically varies from large cities to rural towns and villages. Most companies add a
certain amount to an expatriate manager's pay to cover greater cost-of-living expenses. On the
other hand, managers who are relocating to lower cost-of-living countries are typically paid the
same amount that they were receiving at the home office—otherwise, they would be financially
penalized for accepting an international job assignment.
Companies must cover other costs incurred by expatriate managers even when the cost of living
abroad is lower than at home. One important concern for relocating managers is the quality of
local education. In many cases, children cannot immediately enter local classes because they do
not speak the local language. In such instances, most companies pay for private-school education
Bonus and Tax incentives: Companies commonly offer managers inducements to accept
international postings. The most common is a financial bonus. This bonus can be in the form of a
one-time payment or an add-on to regular pay—generally 15 to 20 percent. Bonuses for
managers who are asked to go into a particularly unstable country or one with a very low
standard of living often receive hardship pay.
Managers can also be attracted by another income-related factor. For example, the U.S.
government permits citizens working abroad to exclude $82,000 of "foreign-earned income"
from their taxable income in the United States—even if it was earned in a country with no
income tax. But earnings over that amount are subject to income tax, as are employee benefits
such as free housing.
Cultural and Social Contributions to Cost-Culture also plays an important role in the
compensation of expatriate managers. Some nations offer more paid holidays than others. Many
offer free medical care to everyone living and working there. Granted, the quality of locally
available medical care is not always good. Many companies, therefore, have plans to take
seriously ill expatriates and family members home or to nearby countries where medical care is
equal to that available in the home country.
Companies that hire managers in the local market might encounter additional costs engendered
by social attitudes. For instance, in some countries employers are expected to provide free or
subsidized housing. In others the government obliges employers to provide paid maternity leaves
of up to one and a half years. Government-mandated maternity leaves vary significantly across
European countries. Although not all such costs need to be absorbed by companies, they do tend
to raise a country's cost of doing business.
Managers recruited from within the host country generally receive the same pay as managers
who work for local companies. Yet they often receive perks not offered by local firms. And some
managers are required to visit the home office at least several times per year. If time allows,
many managers will make these into short vacations by taking along their families and adding a
few extra days onto the length of the trip.
AACSB: Application of knowledge; Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.4: Explain how companies compensate managers and workers.

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95) What factors influence the wages of non-managerial workers?
Answer: Two main factors influence the wages of non-managerial workers. First, their
compensation is strongly influenced by increased cross-border business investment. Employers
can relocate fairly easily to nations where wages are lower. In the home country, meanwhile,
workers must often accept lower wages when an employer gives them a choice of accepting the
reduction or watching their jobs move abroad. This situation is causing a trend toward greater
equality in workers' pay around the world. This equalizing effect encourages economic
development and improvement in workers' lives in some nations at the expense of workers in
other nations. The freedom with which an employer can relocate differs from country to country,
however. Although firms in some countries are allowed to move with little notice, in others they
are highly restricted. Some countries force companies to compensate workers who lose their jobs
because of relocation. This policy is common in European countries that have erected extensive
social safety nets for unemployed workers.
Second, the greater mobility of labor today affects wages. Although labor laws in Europe are still
more stringent than in the United States, the countries of the European Union are abolishing the
requirement that workers from one EU nation must obtain visas to work in another. If workers in
Spain cannot find work at home or if they feel that their current pay is inadequate, they are free
to move to another EU country where unemployment is lower (say, Britain). A problem that
plagues some European countries today is that they seem to be creating a group of people who
are permanently unemployed.
AACSB: Application of knowledge
Skill: Concept
Difficulty: Moderate
LO: 16.4: Explain how companies compensate managers and workers.

96) The positive or negative condition of relations between employers and their workers is
referred to as ________.
A) international relations
B) labor-management relations
C) corporatism
D) organizational hierarchy
Answer: B
AACSB: Application of knowledge
Skill: Concept
Difficulty: Easy
LO: 16.5: Describe the importance of labor-management relations.

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97) Large international companies tend to make high-level labor decisions at the home office
because ________.
A) it creates a sense of unity and solidarity between the labor unions and management members
B) managers in the home office are better equipped than managers in the host-country office, to
handle matters that affect workers personally
C) it places decisions that have a direct impact on host-country workers' lives in the hands of the
home-country experts
D) it gives them greater control over their network of operations around the world
Answer: D
AACSB: Application of knowledge; Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.5: Describe the importance of labor-management relations.

98) ________ allows labor representatives in Germany to participate in high-level company

meetings by actually voting on proposed actions.
A) Centralization
B) Codetermination
C) Individualism
D) Authoritarianism
Answer: B
AACSB: Application of knowledge; Diverse and multicultural work environments
Skill: Concept
Difficulty: Easy
LO: 16.5: Describe the importance of labor-management relations.

Scenario: Swingset International

Jerome Johnston, the human resource manager at the U.S.-based Swingset International, is
developing an international staffing policy for the company. Jerome personally believes
Swingset should send managers from the United States to manage each subsidiary. But the CEO
of the company, Valerie Vermont, believes subsidiary operations ought to be managed by
individuals from the host country.

99) Which of the following is a drawback of Jerome's staffing approach?

A) expense to relocate managers
B) potential for losing control of the host-country operations
C) potential for losing control of the home-country operations
D) inability to re-create local operations in the image of the home-country operations
Answer: A
AACSB: Application of knowledge; Diverse and multicultural work environments
Skill: Application
Difficulty: Hard
LO: 16.5: Describe the importance of labor-management relations.

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100) An important advantage of the staffing policy recommended by Valerie is that it ________.
A) re-creates local operations in the image of home-country operations
B) eliminates the high cost of relocating expatriate managers and families
C) helps the company develop global managers who can adjust easily to any business
environment
D) sends managers from home to look out for the company's interests
Answer: B
AACSB: Analytical thinking; Diverse and multicultural work environments
Skill: Application
Difficulty: Hard
LO: 16.5: Describe the importance of labor-management relations.

101) A major drawback of the staffing policy recommended by Valerie is ________.

A) the potential for losing control of the host-country operations
B) the necessity of depending on managers who don't know the local culture
C) the potential for creating legal barriers to host-country operations
D) the high cost of training managers in the language of the host country
Answer: A
AACSB: Analytical thinking; Diverse and multicultural work environments
Skill: Application
Difficulty: Hard
LO: 16.5: Describe the importance of labor-management relations.

102) What challenges do international labor unions face as they try to accomplish their
objectives?
Answer: The global activities of unions are making progress in areas such as improving the
treatment of workers and reducing incidents involving child labor. But the efforts of separate
national unions to increase their cooperation are somewhat less successful. Although unions in
one nation might want to support their counterparts in another country, generating grassroots
support is difficult for two reasons. First, events taking place in another country are difficult for
many people to comprehend. Distance and cultural difference make it hard for people to
understand others who live and work elsewhere.
Second, whether they realize it or not, workers in different countries sometimes compete against
one another. For example, today firms can relocate internationally rather easily. Thus, labor
unions in one country might offer concessions to attract the jobs that will be created by a new
production facility. In this way, unions in different nations can wind up competing against one
another. Some observers argue that this phenomenon creates downward pressure on both wages
and union power worldwide.
AACSB: Application of knowledge; Diverse and multicultural work environments
Skill: Concept
Difficulty: Moderate
LO: 16.5: Describe the importance of labor-management relations.

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Copyright © 2019 Pearson Education Ltd.