Question

In one sentence, give the name of one country in which the MNE (The MNE being used for this is Austria's Red Bull gmbH) has operations. In one sentence, propose the staffing policy that the MNE should adopt for its operations in that country. In four to five sentences, explain your answer

Assuming that some key management positions must be held by expatriates, propose, in one sentence, whether the MNE should hire home-country expatriates or third-country expatriates for its operations in the country you have named above. In four to five sentences, explain your answer

Answer 1

Red Bull gmbH the Company

Red Bull is owned by the Austrian company Red Bull GmbH, whose introduction of the drink in 1987 in its home country marked the beginning of the global energy drink industry. Red Bull has a 70 to 90 percent market share in over 100 countries worldwide. During the past 15 years, the drink has been copied by more than 100 competitors.

Red Bull is sold in 167 countries and has recently experienced strong sales growth in India, Japan, Turkey, Scandinavia, Russia, and Brazil. It plans to focus on continued expansion in the United States, Western Europe, and the Far East. Red Bull’s advertising strategy relies heavily on event and extreme sports sponsorship, buzz marketing, and television ads. Energy drinks are part of the broader soft drink category, which includes carbonated beverages, fruit and vegetable juices, bottled water, sports drinks, beverage concentrates, ready-to-drink tea, and ready-to-drink coffee.

Lets us Consider India as new operational country for Red Bull, HRM shall follow the staffing policies in the following way:

Staffing for a multinational company is complicated due to diverse environment (business, economic, political, legal), cultural implications & the Parent company's need for control. The rapid expansion of global trade business consolidation & geographical diversification are pushing companies for changes in their management structure and style.

There are four primary approaches that multinational companies use in staffing decisions, including ethnocentric, polycentric, geocentric, and regiocentric approaches. When Human Resource Manager figure out the staffing requirement for their foreign subsidiary they adopt the structure in following ways:
They Appoint home country professional to lead the foreign subsidiary with the objective to establish company's corporate culture in the subsidiary. This approach help in reducing communication between headquarters and the subsidiary and increases control by the headquarters. AT same time they need to appoint local executive to assist another way which HRM can adopt is to appoint the best of the home country executive who has worked in different locations. This approach is the most successful in global company for achieving goals.

In staffing in international business, HR managers must determine when or where to expatriation. Expatriate workers are frequently assigned to key positions in overseas operations. Human resource managers must also decide on the issue of compensation. The compensation of expatriate workers must be examined along with compensation of local workers and the compensation of workers in the home country.
Expatriate management policy in HRM is on how to manage expatriate workers to succeed in staffing operations in the country. A firm’s expatriate management policy would consider the needs of expatriate workers in relation to the needs of other workers in the organization, who may be locals in India or the region. In staffing, HR managers would be concerned about how to bring expatriates to the India and how to ensure that these expatriates perform as expected in the context of operations in India.

The staffing policy approach suitable for the India is either polycentric or ethnocentric. The final choice depends on the specific needs of the organization at the time of the implementation of the staffing policy approach. Overall, the expatriate management policy in the India is comparable to those of the US and other countries in the Middle East.

Assuming that some key management positions must be held by expatriates, propose, in one sentence, whether the MNE should hire home-country expatriates or third-country expatriates for its operations in the country you have named above.

We need to understand the term Home Country Expatriates or Third party Expatriates

Expatriates or home country nationals: employees from the home country who are on international assignment
Host country nationals: employees who are natives of the host country
Third country nationals: employees who are natives of a country other than the home country or host country.

When you expand into an international market, employee knowledge is a critical component of success.
When you send an expatriate, will carry a deep understanding of your organizations's products, policies, systems and culture. On the downside, the expat employee may know little about the local market you're entering.

When a company is either starting or expanding a business overseas, one of the first challenges is hiring and managing quality employees to staff their foreign subsidiary. Employees can fall into two categories in this situation: expat workers that are sent on assignment and foreign workers that reside in the new market. Regardless of which type a company hires, there are several key points to remember for recruiting and managing international employees.

Expatriates are generally defined as individuals who are working away from their home country for a period of one to six months on a short-term assignment or from six months to five years on a long-term assignment. They will return to their home country once their assignment is completed. Although an expatriate and a local hire are both employees of the same company, an expatriate is typically not a citizen of the country where he or she is sent to work, known as the host country. A local hire is usually a citizen of that country or has a permit to work locally where he or she is employed.

When sending employees across borders, you must spend time and money on relocation allowances, immigration requirements, tax equalization calculations and payments, and a lot more. when you send an employee on an expat assignment, you generally know what you’re going to get: a trusted employee who knows your business practices and can train others on how to follow them. Hiring local workers is almost always cheaper in the short term, but may lead to long-term costs and risks that undermine those initial savings. In the end, the decision to hire local workers, send expats or use a combination of the two will be dictated by your company’s unique situation, the laws and culture of your target country, and other factors.

HRM Must keep the following points in mind to ensure smooth working of the system while deciding who to hire for the position:

Compliance is key
Every country has its own laws for employment, taxation, pensions and benefits, and in some cases the rules are different for locals than for expats. The rules of the new market should be researched thoroughly to ensure compliance with local employment and payroll laws. This will help avoid any complications with local authorities. While expat workers may be satisfied with payroll arrangements in the home country, foreign workers will want to ensure that their local benefits and payroll conform to the laws of the host country.

Recognise cultural and language differences
Whether a company is managing foreign workers or asking expats to integrate into a new country, both language and culture can present challenges. For expats, some language ability will help smooth the transition, as well as cultural training in the business practices and social customs of the host country. Due to cultural differences, foreign workers may have different expectations from their employer or work duties, and contracts should be explained and responsibilities outlined in the local language.

Understand probation and termination policies
Often, the rules governing probationary or trial work periods will be established by the laws of the host country, especially for foreign workers. Reasons for termination may have legal restrictions that are new for the human resources department that is accustomed to ‘at-will’ employment, and local protections for workers may prevent termination in some situations.

Be mindful of employment contracts, non-compete agreements and intellectual property
Some countries do not have strict laws or guidelines on the use of proprietary information, or how a non-compete agreement will be adhered to. It is essential to determine how the employment relationship will be viewed at the local level, and what protections or remedies may be if place if an employee decides to leave for another company. In some cases, non-compete compensation may be required during the term of restriction.

Evaluate work experience
Some types of work experience may not be transferrable depending on the nature of the position. Foreign workers may not be familiar with specialized processes or differing standards in a foreign subsidiary, so careful evaluation of job candidates is required.

Hiring international employees presents unique challenges, but by following a few of these guidelines a start-up can enter the new country and even establish a foreign subsidiary with the staff that it needs, as well as comply with local regulations.