17- 0 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 17 Business Customs in Global Marketing

17- 1 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Expatriates Local Nationals Third Country Nationals Host Country Restrictions Recruiting Marketing and Sales Personnel

17- 2 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Maturity Emotional Stability Positive Outlook Flexibility Cultural Empathy Energetic Enjoy Travel Attributes Required for International Operations

17- 3 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill “Master of Destiny” Independent Enterprise as an Instrument for Social Action Personnel Selection and Reward Based on Merit Decisions Based on Objective Analysis Wide Sharing of Decision Making Never Ending Quest for Improvement Basis for U.S. Management Attitudes

17- 4 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Relative Importance (mean) SOURCE: R. Bruce Money and John L. Graham, “Salesperson Performance, Pay, and Job Satisfaction: Tests of a Model Using Data Collected in the U.S. and Japan,” Journal of International Business Studies, The Sales People Were Asked to: ‘Distribute 100 Points among the Rewards in Terms of their Importance to You.’

17- 5 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Global Similarity to U.S. Compensations Plans Europe South- east Asia Similar Dissimilar Varies SOURCE: David G. Schick and David J. Cichelli, “Developing Incentive Compensation Strategies in a Global Sales Environment,” ACA Journal, Autumn 1996.

17- 6 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Total Compensation Annually Personal Contribution Corporate Objectives Incentive Compensation Variable Pay Benefits Recognition Base Salary Teamwork Challenges/ Contests Monthly Quarterly As earned Plan Components Payout Frequency Pay Measurements Number of Measurements Used to Calculate Bonus payment (based on) Profit Customer satisfaction 20% of incentive compensation Work team performance Industry performance 60% of incentive compensation Growth Solutions Channels/partners Profit contribution 20% of incentive compensation National Local A Compensation Blueprint How IBM Pays 140,000 Sales Executives Worldwide SOURCE: Michele Marchetti and Antonio Langemi, “Gamble,” Sales and Marketing Management, July 1996, p

17- 7 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill l Do involve representatives from key countries. l Do allow local managers to decide the mix between base and incentive pay. l Do use consistent performance measures (results paid for) and emphasis on each measure. l Do allow local countries flexibility in implementations. l Do use consistent communication and training themes worldwide. Do’s of Global Compensation

17- 8 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill l Don’t design the plan centrally and dictate to local offices. l Don’t create a similar framework for jobs with different responsibilities. l Don’t require consistency on every performance measure within the incentive plan. l Don’t assume cultural differences can be managed through the incentive plan. l Don’t proceed without the support of senior sales executives worldwide. Don’ts of Global Compensation

17- 9 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill l Overcoming Reluctance to Accept a Foreign Assignment l Reducing the Rate of Early Returns l Successful Expatriate Repatriation Preparing U.S. Personnel for Foreign Assignments

© The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill l Communicate respect and interest for people and their culture. l Tolerate ambiguity and cope with cultural differences. l Display empathy by understanding needs and differences. l Be nonjudgmental by not judging by your value standards. l Recognize and control SRO as an influence. l Laugh things off when things do not work as planned. Cultural Skills

© The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Colgate-Palmolive Fast Track Two Years-Rotate Through Finance Manufacturing Marketing Market System Ad Agency Marketing Research Product Management Seven Months in Sales Trip with Company Mentor to Foreign Subsidiary upon Completion of Two Years. Foreign Posting - not Paris but Brazil, Zambia or some third world Second Foreign Posting Possible Return to Domestic Market