Group ExerciseGroup Exercise

You are an American Executive in the computer industry.

You currently manage a manufacturing division for the company in Santa Clara, California, USA. The division has 1000 employees.

You have been offered the opportunity to manage the company’s manufacturing division in Tokyo, Japan. That division also has 1000 employees.

This is a career development opportunity that you want. It will enhance your experience and future career growth.

The company expatriate policy is to select people for foreign assignments that understand the people managing differences required for success; and to financially, and in lifestyle keep them whole while maintaining competitive compensation and lifestyle.

You must describe the key cultural differences between the United States and Japan; and:

List how each cultural difference will require a different treatment of employees (U.S. versus Japan) (can use Hofstede.com, your textbook, economist, CIA factbook, etc.)

What are the key cultural differences in Japan?

Cultural Factor:The United States: Tokyo, Japan:

RELIGION

Education

Economics

Politics

Family

Class Structure

Languages

History

Natural Resources/Geography

1. How will you have to manage differently because of those differences?

1. .2. .3. .4. .5. .6. .7. .

Compensation

More than just level of pay Health care Pension plans Vacation Personal time off Recreation/health facilities

Great variations within a culture and across cultures

Compensation (Cont’d)

Great variations across countries

Many companies look for low-cost labor

Labor not the only cost a company should consider

Companies should consider tax issues for both the company and for the employee

Perks part of total compensation

Meaning of Compensation

Exchange of effort and output for wages and benefits Western individualist cultural perspective

Achievement

Protection or safety net

Entitlement and obligation

Predicted Compen-sation Practices across Cultures

Differences in Performance Evaluation Systems Across Three Countries

CEO Compensation

Relative compensation

Perks and other compensation

Total compensation

Oceans Apart: CEO Compensation In Several Countries

Paid Vacation Days in Various Countries

Potential Sources of Costs Associated with Expatriation

Expatriate Housing Costs in Ten Foreign Cities

Taxes

Technical and difficult to deal with

Large number of tax, securities, and currency control rules

Consider marginal tax rates and tax-equalization agreements

Tax Rates Around The World

Living Expenses

Food, transportation, clothing, entertainment, etc.

Difficult to estimate due to fluctuations

Keeping lifestyle and consumption choices

Cost Estimates for Goods and Services in Various World Cities

Purchase Power Parity

The degree to which an expatriate’s money will purchase the same items in a foreign locale.

The Big Mac in Various Countries

The Balance Sheet Approach to Expatriate Compensation

COMPENSATION

The company has asked how you should be compensated in order to make sure you are kept “whole” and that your compensation is competitive.

You must present a rationale and specific amounts and items that you believe you should receive

Total Compensation Comparison

Items (examples)

US—Your current cost(you may use NY $$)

What you should get in Tokyo

Base Salary

Bonus / Incentive Pay / stock

Health care

Pension plans

Vacation

Personal time off

Recreation/health

Housing

Transportation

Living Expenses

INTERNATIONAL MANAGEMENT -- GROUP EXERCISE.

TOTAL COMPENSATION FOR EXPATRIATE EMPLOYEE in Tokyo: $0

Total Compensation for employee if based in the U.S. : $226,000  

  U.S Tokyo   Tokyo

Direct payments $226,000 $0 Support for Adjustment at Foreign Assignment $0

Base Salary (annual - in U.S.) $152,000 Home Leave (every 4-8 weeks)  

Annual Bonus (in U.S) $31,000   Personal Security  

Incentive pay / Stock / etc. $22,000   Car / Driver  

Pension plans $15,000   Domestic Help  

Vacation (4 weeks) $0   Spouse Employment  

Personal time off $0   Child care Provider  

Recreation/health $0   Language / translation services  

Housing $0   Cultural training  

Transportation $0   Repatriation assistance  

Health care $6,000   Social Club fees  

Tax Reduction / equalization $0  Imported food and other goods  

Home Furnishing Allaowance $0     

Education Allowance $0     

Hardship Premium $0     

Goods and services Differential $0      

Temporary Living Allowance $0     

Assignment completion bonus $0     

Extension Bonus $0     

Help Renting U.S. Home $0     

INTERNATIONAL MANAGEMENT -- GROUP EXERCISE.TOTAL COMPENSATION FOR EXPATRIATE EMPLOYEE in Tokyo: $0Total Compensation for employee if based in the U.S. : $226,000

U.S Tokyo Tokyo

Direct payments $226,000 $0

Support for Adjustment at Foreign Assignment $0

Base Salary (annual - in U.S.) $152,000 Home Leave (every 4-8 weeks)Annual Bonus (in U.S) $31,000 Personal SecurityIncentive pay / Stock / etc. $22,000 Car / DriverPension plans $15,000 Domestic HelpVacation (4 weeks) $0 Spouse EmploymentPersonal time off $0 Child care ProviderRecreation/health $0 Language / translation servicesHousing $0 Cultural trainingTransportation $0 Repatriation assistanceHealth care $6,000 Social Club feesTax Reduction / equalization $0 Imported food and other goodsHome Furnishing Allaowance $0Education Allowance $0Hardship Premium $0Goods and services Differential $0Temporary Living Allowance $0Assignment completion bonus $0Extension Bonus $0Help Renting U.S. Home $0