Chapter 16

Question 1

Which of the following countries has the greatest flexibility of each company to determine wages? 
  A) Argentina 
  B) Germany 
  C) Japan 
  D) Australia

Answer 1

C) Japan

Question 2

In \_\_\_\_\_\_\_\_\_, companies have the least flexibility in hiring and firing workers. 
  A) Sweden 
  B) United States 
  C) Germany 
  D) Denmark

Answer 2

A) Sweden

Question 3

The Chinese computer company Lenovo has pay differentials of 30 to 1 and a flexible benefits plan.
A) TRUE
B) FALSE

Answer 3

A) TRUE

Question 4

Social contract and culture are examples of \_\_\_\_\_ factors in international compensation. 
  A) economic 
  B) employee 
  C) organizational 
  D) institutional

Answer 4

D) institutional

Question 5

Use of performance-based pay is increasing in Germany, Japan and China.
A) TRUE
B) FALSE

Answer 5

A) TRUE

Question 6

The cost in minutes of working time to buy a Big Mac is most expensive in \_\_\_\_\_\_\_\_\_\_\_\_. 
  A) Munich 
  B) Miami 
  C) Nairobi 
  D) Tokyo

Answer 6

C) Nairobi

Question 7

The national mind-set tends to ignore variation among organizations within each nation.
A) TRUE
B) FALSE

Answer 7

A) TRUE

Question 8

The \_\_\_\_\_\_\_\_\_\_\_ model for business and compensation may be the business model of the 21st century. 
  A) globalizer 
  B) localizer 
  C) exporter 
  D) matrix

Answer 8

A) globalizer

Question 9

Which of the following category of employees is generally most advantageous for a multinational corporation to utilize for a foreign location position? 
  A) a third-country national 
  B) an expatriate 
  C) a business commuter 
  D) a local-country national

Answer 9

D) a local-country national

Question 10

The balance sheet approach to paying expatriates attempts to provide them the same spending power while on overseas assignment as they would have in their home country.
A) TRUE
B) FALSE

Answer 10

A) TRUE

Question 11

How people get paid around the world depends on what 4 things?

Answer 11

1. economic variations
2. institutional variations
3. organizational variations
4. employee characteristics

Question 12

What are relevant factors in international compensation?

Answer 12

1. social contracts
2. cultures
3. trade unions
4. ownership and financial markets
5. managers’ autonomy

Question 13

What are the “3 pillars” of traditional Japanese employment relationships?

Answer 13

1. Lifetime security
2. Seniority-based pay and promotion
3. Enterprise unions (decentralized unions in single company

Question 14

T/F German pay decisions are highly regulated?

Answer 14

T

Question 15

What are 3 General international compensation strategies?

Answer 15

1. Localizer= independent of corporate HQ- pay consistent with local conditions
2. Exporter= HQ system exported to other countries
3. Globalizer=common system between global locations to support consistency

Question 16

What are PCNs?

Answer 16

Parent Country Nationals (expats native to home country of company)

Question 17

What are TCNs?

Answer 17

Third Country Nationals (expats not native to home country of company or work country)

Question 18

What are LCNs?

Answer 18

Local Country Nationals (citizen of country where company operates)

Question 19

What are elements of Expatriate compensation?

Answer 19

1. Salary
2. Taxes
3. Housing
4. Allowances and Premiums

Question 20

Why do companies pay expats allowances/

Answer 20

Because expats must:

1. Work without supervision
2. live/work in strange surroundings
3. represent the employer in host country

Question 21

What are the objectives of the Balanced Sheet Approach?

Answer 21

1. Ensure mobility of people to global assignments
2. Ensure expats don’t gain/lose financially
3. Minimize adjustments for expats and families

Question 22

T/F The United States is the only developed country that taxes its citizens for income earned in a foreign country

Answer 22

T

Question 23

What are some alternatives to Balanced Sheet Approach?

Answer 23

1. Negotiation- mutually agreeable package
   2 Localization- use host country salary scales and provide allowances for taxes, housing, dependents, etc.
2. Modified Balance Sheet- ties salary to a region, instead of country
3. Lump Sum/Cafeteria- Sets salaries at home country rates, gives lump sum allowance