Study Case

CHAPTER 2I HUI4AN RESOURCE MANAGEMENT 903 type Office Equipment Company (OEC) director (a U. S. national) of the office Equipment Company (oEc) in Lima, Peru (see symbolize 2l . l), announced suddenly that he would leave within one month. The company had to find a replacement. OEC manufactures a wide variety of niggling office 1997, the managing ln equipment (such as copying machines, recording machines, mail scales, and paper shredders) in eight different countries and distri neverthelesses and sells products worldwide. lt has no manufacturing facilities in Peru but has been selling and servicing there since the early 1970s.OEC first tried selling in Peru through independent importers but quickly became convinced that in order to make sufficient gross revenue it needed to have its own staffthere. Despite Perus political turmoil, which at times has bordered on cosmos a full-scale civil war, OECS operation there (with about 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 lead import components for personal computer printers and assemble them loc aloney.Peru offers an abundant supply of cheap labor, and the assembly oPeration provide employ approximately 150 people. The government will allow up to I0 percent of the output to be sold locally. By assembling locally and then exporting, oEC expects to be able to ward off craft 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 director will herald 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 the exiting managing director with an immanent panorama. The company employs a combination of home-, host-, and third-country nationals in top positions in inappropriate countries, and managers commonly rotate among extraneous and U. S. locations. ln fact, it has been increasingly evident to OEC that international experience is an important factor in deciding who will be appointed to top corporate positions.The sales and service facility in Peru reports to a Latin American regional office located in Coral Gables, Florida. A committee at this office, charged with selecting the novel managing direc- tor, quickly narrowed its choice to five candidates. Tom A thirty-year OEC veteran, Zimmerman is closely 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 iv and a half years.Neither he nor his wife speaks Spanish. Their chil dren are grown and living with their own children in the linked States. Zimmerman currently is in charge of an operation that is aboutthe size of that in Peru after the reinvigorated factory begins operating. However, Zimmermans hand over position will become redundant because the operation he heads is being merged with another. Brett Harrison Harrison, 40, has spent 15 years at OEC. Considered highly compehas tent and capable of moving into upper-level management within the coterminous few years, he 904 PART 7 FUNCTIONAL I. ANAGEI1 ENT, OPERATIONS. AND CONCERNS PERU Population 22. 3 million Monetary whole 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 based abroad but has worked for the last three years in the Latin American regional office and frequently travels to Latin America. Both he and 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 responsible marketing position with a pharmaceuticals company.Carolyn language. Moyer Moyer joined OEC twelve years ago after acquire her MBA from a pres- tigious university. 4t37, she has already moved between staffand line positions of growing responsibility. For two years, she was second in involve of a product group that was aboutthe size of the newly expanded one in Peru. Her performance in that. postwas considered excellent. Currently, she works on a planning staffteam. When she joined OEC, she indicated her interest in eventual international responsibilities because of her undergrad major in international affairs.She has recently expressed interest in international duties because of a look 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 Mexi can 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 sevensome years. He is married with four children (ages 2 to 7) and speaks English adequately.His wife does not work izen, he has worked alfresco the home or speak English. CHAPTER 2I HUMAN RESOURCE MANAGEMENT 905 Juan more(prenominal)no 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 should ihe committee prefer for the assignment, and whyl 2. Wha t problems might all(prenominal) candidate encounter 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 package for each candidate based on the following additional inf6rmation Present annual salaries Zimmerman, U5$70,000 Harrison, US$75,000 Moyer, US$65,000 Cabrera, M$ I 24,000 Moreno, 557,000 a Exchange 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$9000 Average tax rates Mexico 20 percenq United States 25 percent Peru I Ho using allowance (nontaxable) single US$ 12,100family US$ 15,000 0 percent Chapter Notes l. The data for the case were interpreted from Edwin McDowell, Making lt in America The Foreign-Born administrator, New York Times, June I, 1980, Section 3, p. l+ Don Whitehead, The Dow Story (New York McGraw-Hill, I968) Lundeen Urges More Aid for Universities, Chemrcal Marlceting Reporter, Yol. 224, No. 19, November 7, 1983, p. 3+Paul L. Blocklyn, Developing the lnternational Executive, Personnel, Vol. 66, March 1989, pp. September 14,1992, p. 5 Popoffon Challenges for Dow and for the lndusvy Chemical Wee( whitethorn 18, 1994, pp. 26-28 and Susan J.Sinsworth, lssues Management ls Central to Frank Popoffs Globalization Strategy, Chemlcol Engineering News, Vol. 72, No. 21, May 23, 1994, pp. 2529. 2. Gary R. Oddou and Mark E. Mendenhall, chronological succession Planning for the 2 l st Cen- European Management lournol, Yol. I 4, No. 4, August 1996, pp. 365-373. 4. Globesmanship, Across the Boar d, Yol. 27, Nos. l, 2, January-February 1990, p. 26, quoting Michael Angus. 5. Daniel Ondrack, lnternational Transfers of Managers in North American and European MNEs, Journol of lnternailonol Business 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 slip of paper 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 Grooming 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,