Study Case

CHAPTER 2I HUI4AN RESOURCE MANAGEMENT 903 Case Office Equipment Company (OEC) handler (a U. S. national) of the section Equipment Company (oEc) in capital of Peru, Peru (see Map 2l . l), announced suddenly that he would leave within one month. The company had to find a replacement. OEC manufactures a wide variety of small office 1997, the managing ln equipment ( such as copying machines, transcription machines, mail scales, and paper shredders) in eight different countries and distributes and sells proceedss worldwide. lt has no manufacturing facilities in Peru but has been selling and servicing there since the early 1970s.OEC first assay selling in Peru through independent importers but quickly became convinced(p) that in order to make sufficient sales it needed to reach its own staffthere. Despite Perus political turmoil, which at times has bordered on being a full-scale civil war, OECS accomplishment there (with around 100 employees) has enjoyed good and improving sales and profitability. OEC is constructing its first factory in Peru that is scheduled to begin operations in early 1999. This factory entrust import components for personal computer printers and assemble them locally.Peru offers an abundant supply of affordable labor, and the assembly oPeration give employ approximately 150 people. The government activity depart allow up to I0 percent of the output to be interchange locally. By assembling locally and then exporting, oEC expects to be able to hospital ward off trade restrictions on the other office equipment it imports for sale within Peru. This plant construction is being supervised by a U. S. rechnical ream, and a U. S. expatriate will be assigned to direct the production. This handler will report directly to OECs U. S. eadquarters on all production and quality-control matrers but will rePort to the managing director in Peru on all other matters, such as accounting, finance, and labor relations. OEC, by policy, will replace t he exiting managing director with an ingrained prognosis. The company employs a combination of home-, host-, and third-country nationals in top government senescencys in outside(prenominal) countries, and managers commonly rotate among foreign and U. S. locations. ln fact, it has been increasingly evident to OEC that outside(a) have got is an important factor in deciding who will be ordained to top corporate positions.The sales and service facility in Peru reports to a Latin American regional office located in precious coral Gables, Florida. A committee at this office, charged with selecting the new managing direc- tor, quickly narrow its choice to volt candidates. Tom A thirty-year OEC veteran, Zimmerman is substantially versed in all the technical and sales aspects required in the job. He has never worked abroad for OEC but has visited various of the companys foreign facilities as part of sales teams. He is consid- Zimmerman ered competent and will retire in about tetra d and a half years.Neither he nor his wife speaks Spanish. Their children are grown and documentation with their own children in the United postulates. Zimmerman currently is in charge of an operation that is aboutthe size of that in Peru after the new factory begins operating. However, Zimmermans consecrate position will become redundant because the operation he heads is being merge with another. Brett Harrison Harrison, 40, has spent fifteen years at OEC. Considered highly compehas tent and surefooted of moving into upper-level management within the next few years, he 904 PART 7 FUNCTIONAL I. ANAGEI1 ENT, OPERATIONS. AND CONCERNS PERU Population 22. 3 million financial unit New sol Major languages Span ish Quech ua Aymara Largest city Lima Major industrial areas Arequipa Chimbote Cuzco lquitos Lima Talara Map 2l. l Peru never been establish abroad but has worked for the last three years in the Latin American regional office and frequently travels to Latin America. Both he a nd his wife speak Spanish adequately, and their two children, ages I 4 and I 5, are just beginning to study the His wife holds a trustworthy marketing position with a pharmaceuticals company.Carolyn language. Moyer Moyer joined OEC twelve years agone after getting her MBA from a pres- tigious university. 4t37, she has already moved between staffand crimp positions of growing responsibility. For two years, she was second in command of a product group that was aboutthe size of the newly expanded one in Peru. Her functioning in that. postwas considered excellent. Currently, she works on a planning staffteam. When she joined OEC, she indicated her concern in eventual international responsibilities because of her undergraduate major in international affairs.She has recently expressed interest in international duties because of a belief it will help her advancement. She speaks Spanish well and is unmarried. Francisco Cabrera Cabrera, 35, currently is an assistant managing director in the larger Mexican operation, which produces and sells for the Mexican market. A Mexican cit- for OEC in Mexico for all his twelve years with the company. He holds an MBA from a Mexican university and is considered to be a likely candidate to head the Mexican operation when the present managing diiector retires in seven years. He is married with four children (ages 2 to 7) and speaks side adequately.His wife does not work izen, he has worked outside the home or speak English. CHAPTER 2I HUMAN RESOURCE MANAGEMENT 905 Juan Moreno At27, Moreno is assistant to the present managing director in Peru. He has held that position since joining OEC upon his U. S. college graduation four years ago. Unmarried, he is considered competent, especially in employee relations, but lacking in experience. He had been successful in increasing OECs sales, in part because he is well connected with local families who can afford to buy new office equipment for their businesses. Questions l.Which candidate s hould ihe committee choose for the assignment, and whyl 2. What problems might each candidate materialize in the position? 3. 4. How might OEC go about minimizing the problems that each candidate would have in managing the Peruvian operations? Calculate an estimated compensation big bucks for each candidate based on the following additional inf6rmation vex annual salaries Zimmerman, U5$70,000 Harrison, US$75,000 Moyer, US$65,000 Cabrera, M$ I 24,000 Moreno, 557,000 a commuting rates $ I M$3. 1 (Mexican pesos)$ I S 1. 9 (Peruvian new sols) o f income for a family of one, 40 percent for a family of two, 45 percent for a family of four, and 50 percent for a family of five or more Washington, D. C. 100 Lima 86Mexico City 77 U. S. Department, of State foreign-service premiums for Peru hardship l5 percent danger l5 percent U. S. Department of State cost-of-living index based on items covering 35 percent a a o Schooling allowance age 6-12 US$5000age 3-18 US$9000 Average tax rates Mexico 20 percenq United States 25 percent Peru I Housing allowance (nontaxable) single US$ 12,100family US$ 15,000 0 percent Chapter no(prenominal)es l. 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Daniel Ondrack, lnternational Transfers of Managers in North American and European MNEs, Journol of lnternailonol blood Studies, Vol. 16, No. 3, Fall 1985, pp. l-19andJohn M.Hannon, lngChung Huang, and Bih-Shiaw Jaw, lnternational Human Resource Strategy and Its Determinants The Case of Subsidiaries in Taiwan,Journal of lnternotionol Business Studies, Vol. 26, No. 3, Third Quarter 1995, pp. 53 l-554. 4447 Globesmanship, Across the Boor4 Vol. 27, Nos. l,2,January-February 1990, pp. 24-34William Storck, Dow Chemical Changes Executive Lineup, Chemical ond Engineering News, tury How Well Are We preparedness Our Future Business Leadersl Business Horizons, January-February I 99 I, pp. 26-34. 3. Gordon Petrash, Dows Journey to a Knowledge Value Management Culture,