Group 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?

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.STokyo Direct payments $226,000 $0 Support for Adjustment at Foreign Assignment$0 Base Salary (annual - in U.S.)$152,000Home 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