This tutorial covers the basics of international business operations. First, we look at international production decisions, which are influenced by a range of varying factors. We take a close look at why some manufacturing jobs are returning to the U.S., and why some are still leaving. We look at the cases of Komo, Apple, and Dell Computers. Next, we briefly review global staffing policies, with the three key policies of an ethnocentric, polycentric, and geocentric approach. Examples from Toyota and Sony are reviewed.

1. IBUS2301:
International Business Management
Tutorial #11, May 26 and 27
Chapters 15 and 17: International Business Operations
Tutor: Preston Teeter, p.teeter@business.uq.edu.au

2. International Business: Asia-Pacific Edition
Dowling, Liesch, Gray, Hill
Chapter 12
The Organisation of International Business

3. IBUS2301:
Int’l Business Mgmt
Next Week
• Tutorial feedback
– Note: feedback on course structure, design
(text, presentations, assignments), etc
belongs to lecture feedback
• Attendance = x2
• Brief final review
– Please email questions in advance

4. IBUS2301:
Int’l Business Mgmt
Outline
• Global production
• Global staffing

5. IBUS2301:
Int’l Business Mgmt
GLOBAL PRODUCTION

6. IBUS2301:
Int’l Business Mgmt
Global
Production
What factors influence the location of a firm’s
international production activities?
• Country factors
• Technological factors
• Product factors

7. How do these factors interact
with a firm’s strategy and
degree of centralization?

8. IBUS2301:
Int’l Business Mgmt
Back to the USA?
• Watch the following two videos:
– http://www.youtube.com/watch?v=FK_xOdMkD_Q
– http://www.youtube.com/watch?v=3kZUv1YjZ3c
• Questions:
1. Why are some manufacturing jobs returning to
the U.S.?
2. How do you think this will play out over the next
10 or 20 years?

9. Source: komo.com

10. Source:InternationalBusinessTimes

11. Source:Forbes.com

12. Source: NY Times

13. A Typical Unit Cost Curve

14. IBUS2301:
Int’l Business Mgmt
Minimum
Efficient Scale
• Plant to manufacture PCs
– 250,000 units/year
• Global demand
– 35 million units (and rising)
• .7% of global demand per factory

15. Source: USA Today

16. Source: eandt.org

17. Location Strategy and Production

18. IBUS2301:
Int’l Business Mgmt
GLOBAL STAFFING

19. 5/27/2014
IBUS2301:
Int’l Business Mgmt
What are the various types of global staffing
policies?
• Ethnocentric approach
– Key positions filled by parent-country nationals
• Polycentric approach
– Host-country nationals manage subsidiaries
• Geocentric approach
– Seeks best people for key jobs, regardless of nationality
Global Staffing

20. What are the advantages and
disadvantages of each approach?
Also, what international strategy is
each approach best suited for?

21. Source: NY Times

22. 5/27/2014
IBUS2301:
Int’l Business Mgmt
Top reasons for expat failure (US firms):
1. Inability of spouse to adjust
2. Manager’s inability to adjust
3. Other family problems
4. Manager’s personal or emotional maturity
5. Inability to cope with larger overseas
responsibilities
Expat Failure

23. Source: hsbc.com
Best Countries for Expats
(for experience and family)

24. Source:FinancialTimes

25. Source: NY Times

26. Comparison of Staffing Approaches
Staffing Approach
Strategic
Appropriateness Advantages Disadvantages
Ethnocentric International • Overcomes lack of
qualified managers in host
nation
• Unified culture
• Helps transfer core
competencies
• Produces resentment in
host country
• Can lead to cultural
myopia
Polycentric Localization • Alleviates cultural myopia
• Inexpensive to implement
• Limits career mobility
• Isolates headquarters
from foreign subsidiaries
Geocentric Global standardization
and transnational
• Uses human resources
efficiently
• Helps build strong culture
and informal management
networks
• National immigration
policies may limit
implementation
• Expensive

27. Questions?