Read the section titled "Selecting Employees in a Global Labor Market." In this activity, you will analyze the responses of candidates during their interview for an international assignment and evaluate the strengths and weaknesses of each candidate.

For firms operating in multiple countries, being able to effectively select and manage employees in global markets is a critical human resource management skill. Done correctly, it can even become a source of competitive advantage. Training and development programs are essential for all participating employees, regardless of their country of origin. Culture shock can make an expatriate working away from the home country feel disillusioned and isolated, unless the employee has been well prepared in advance. Once a need for a parent-country national to work in an internationally located operation has been made, selecting the best person for the job is a task that can make or break the assignment.

Read the case below and answer the questions that follow.

Roger's United States-based company is planning on opening a new subsidiary in Brazil. Corporate headquarters has identified three candidates—David, Megan, and Mary Ann—who all have the technical skills necessary to run the new subsidiary successfully. Roger has been asked to interview each candidate to see who would be the most likely to succeed in this role. Read the brief excerpts from Roger's interview with each candidate and evaluate the strengths and weaknesses of each.

David
"I really think this job could put me on strong financial footing, and I'm excited to be considered for this position just three years after starting here. I don't anticipate any relocation problems, since I've traveled extensively in Europe and I can't imagine Brazil is much different since they speak a European language, even if they are in South America. I'm good with languages and took four years of French in high school. My wife works at the university in town and said that finding a comparable job in Brazil might be a challenge, but I'm sure we can work something out. I've never had any health problems either, just a broken bone or two in my younger days. This will be my first position in a managerial role, but I was on good terms with my last boss so I'll just ask her if any problems come up. I work well with my coworkers, as long as they see eye-to-eye with me. One of my strengths is getting people to come around to my point of view. I don't know exactly what my role will be once I get back home, but I'm sure HQ will figure something out, and if things don't work out here, at least the Brazilian assignment will look good on my resume."

Megan
"International business was one of my undergraduate majors, so I've been hoping to get a chance at an international assignment since I joined the company five years ago. I don't speak Portuguese but I'm fluent in Spanish and studied abroad for a year in Argentina, and so even though there are differences between the languages and cultures, I don't anticipate any problems in that respect. My husband was in the Peace Corps in Africa for four years before we met, so he's used to living abroad and we love to travel. He teaches English as a second language, so finding a job for him in Brazil shouldn't be too difficult either. I consider myself an independent thinker, but my time in Argentina also taught me to be flexible and creative. My only health issue is hypothyroidism, but I've had it under control for a decade, and my doctor has checked to make sure getting medicine in Brazil would not be a problem in the big cities. Our kids are in college, so moving won't be a problem. I've talked extensively with my supervisor, and she thinks this assignment fits in nicely with my progression within the company."

Mary Ann
"My grandfather is Brazilian, but we weren't very close so I never picked up much of the language or culture. Honestly, I've never been much for languages, but English is so universal these days it's never been much of a problem. I'm going through a divorce at the moment, so it'll be nice to have a temporary stop overseas to get a bit of a fresh start for whatever lies ahead. We have two kids in middle school, but we're trying to work out an arrangement. My husband travels all the time for work, so we'll probably have to work out some kind of joint custody arrangement. I have pretty bad asthma, but it isn't a problem as long as stress and air pollution isn't too bad. Apparently, my usual medicine isn't available in Brazil, so hopefully I'll be able to find something else that works. I've been with the company for a little over a decade now, so I know the company philosophy well and am comfortable that my decisions will reflect the company mission. I've always gotten along well with coworkers and consider patience to be one of my strengths."

1.Of the three candidates based on the interview details, David appears to have the:

Multiple Choice

a.Least flexibility, tolerance for ambiguity, and sensitivity to cultural differences.

b.Lowest willingness to learn about the foreign country’s culture, language, and customs.

c.Highest level of experience and competency in the employee’s area of expertise.

d.Most flexibility, tolerance for ambiguity, and sensitivity to cultural differences.

e.Best motivation to succeed and would enjoy this international challenge.

2.Of the three candidates based on the interview details, Mary Ann appears to have the:

Multiple Choice

a.Least willingness to learn about the foreign country’s culture, language, and customs.

b.Highest willingness to learn about the foreign country’s culture, language, and customs.

c.Lowest level of experience and competency in the employee’s area of expertise.

d.Most flexibility, tolerance for ambiguity, and sensitivity to cultural differences.

e.Least motivation to succeed in an international challenge.

3.Based on the interview details and of the three candidates, Megan appears to have:

Multiple Choice

a.Highest willingness to learn about the foreign country’s culture, language, and customs.

b.Least willingness to learn about the foreign country’s culture, language, and customs.

c.Lowest level of experience and competency in the employee’s area of expertise.

d.Lowest flexibility, tolerance for ambiguity, and sensitivity to cultural differences.

e.Highest indifference to pursuing an international challenge.

4.Each of the candidates have family and some health issues that impact choosing them for an international assignment. Which statement best reflects the importance of this factor?

Multiple Choice

a.The comfort of the family strongly influences whether an employee completes an international assignment.

b.Family and health issues are of no concern for an international assignment.

c.As long as supporting spouses can find a job, only health issues should impact an international assignment.

d.As long as medical care is available, only family issues should impact an international assignment.

e.Lack of international experience is the only reason not to choose a candidate for this type of assignment.

5.Which statement for each of the three candidates is most likely accurate?

Multiple Choice

a.Megan would experience the least culture shock due to her past experience in Argentina.

b.David would experience the least culture shock due to his experience traveling in Europe.

c.Mary Ann would experience the least culture shock due to having a Brazilian grandfather.

d.Megan would have the longest adjustment period to accept and enjoy the host country’s culture.

e.Mary Ann would have the shortest culture shock period since she is getting divorced.

6.Once the company chooses the best candidate for this assignment, which statement best reflects the training preparations needed for the employee to transition abroad?

Multiple Choice

a.Employee and their families should have cross-cultural training for all phases of an international assignment.

b.Megan would require no training for this international assignment.

c.David would require cross-cultural training for the assignment and when returning home.

d.Mary Ann would require cross-cultural training for the departure and the assignment.

e.Only the chosen employee requires cross-cultural training for departure, the assignment, and returning home.

Upper Division of Lower Company acquired an asset with a cost of $560,000 and a four-year life. The cash flows from the asset, considering the effects of inflation, were scheduled as follows.

The cost of the asset is expected to increase at a rate of 20 percent per year, compounded each year. Performance measures are based on beginning-of-year gross book values for the investment base. Ignore taxes.

Required:

a. What is the ROI for each year of the asset's life, using a historical cost approach?

b. What is the ROI for each year of the asset's life if both the investment base and depreciation are determined by the current cost of the asset at the start of each year?

Assume that a parent company acquired 80% of a subsidiary on January 1, 2014. The purchase price was $175,000 in excess of the subsidiary’s book value of Stockholders’ Equity on the acquisition date, and that excess was assigned entirely to an unrecorded Patent owned by the subsidiary. The assumed economic useful life of the patent is 10 years.

Assume that subsidiary sells inventory to the parent. The parent, ultimately, sells the inventory to customers outside of the consolidated group. You have complied the following data for the years ending 2015 and 2016 related with intra-entity inventory sales.

                Inventory Sales                 Gross Profit Remaining in Unsold Inventory

2016           $ 103,300                                   $29,441

2015           $ 87,900                                     $19,137

The inventory not remaining at the end of the year has been sold to unaffiliated entities outside of the consolidated group. The unsold part will be sold to unaffiliated entities in the following year. The parent company applies equity method for this investment.

Subsidiary reports $216,930 as net income on its income statement for the year of 2016.

1. Show the computation to yield the pre-consolidation balance for Equity income in subsidiary (appeared under parent company’s income statement) during 2016.
2. If the intra-entity sales changes from upstream to downstream, then how would the balance change for Equity income in subsidiary during 2016.
3. Show the consolidation adjustment entries related to intra-entity inventory sales.

On January 23, 16,000 shares of Tolle Company are acquired at a price of $24 per share plus a $160 brokerage commission. On April 12, a $0.40-per-share dividend was received on the Tolle Company stock. On June 10, 6,400 shares of the Tolle Company stock were sold for $32 per share less a $100 brokerage commission. Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method. Refer to the Chart of Accounts for exact wording of account titles. When required, round your answers to the nearest dollar. CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 111 Petty Cash 120 Accounts Receivable 121 Allowance for Doubtful Accounts 131 Notes Receivable 132 Interest Receivable 141 Merchandise Inventory 145 Office Supplies 161 Investments-Tolle Company Stock 165 Valuation Allowance for Trading Investments 166 Valuation Allowance for Available-for-Sale Investments 181 Land 193 Office Equipment 194 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 231 Interest Payable 241 Salaries Payable EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Treasury Stock 332 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 350 Unrealized Gain (Loss) on Available-for-Sale Investments 351 Cash Dividends 352 Stock Dividends 390 Income Summary REVENUE 410 Sales 611 Interest Revenue 612 Dividend Revenue 621 Income of Tolle Company 631 Gain on Sale of Investments 641 Unrealized Gain on Trading Investments EXPENSES 511 Cost of Merchandise Sold 512 Bad Debt Expense 516 Cash Short and Over 520 Salaries Expense 531 Advertising Expense 534 Selling Expenses 535 Rent Expense 537 Office Supplies Expense 562 Depreciation Expense-Office Equipment 590 Miscellaneous Expense 710 Interest Expense 721 Loss of Tolle Company 731 Loss on Sale of Investments 741 Unrealized Loss on Trading Investments Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method. Refer to the Chart of Accounts for exact wording of account titles. When required, round your answers to the nearest dollar.

Upper Division of Lower Company acquired an asset with a cost of $550,000 and a four-year life. The cash flows from the asset, considering the effects of inflation, were scheduled as follows:

The cost of the asset is expected to increase at a rate of 10 percent per year, compounded each year. Performance measures are based on beginning-of-year gross book values for the investment base. Ignore taxes.

Year Cash Flow

1 $200,000

2 $245,000

3 $280,000

4 $305,000

Required:

a. What is the ROI for each year of the asset's life, using a historical cost approach? (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)

ROI

Year

1    _____ %

2   _____ %

3   _____ %

4   _____ %

b. What is the ROI for each year of the asset's life if both the investment base and depreciation are determined by the current cost of the asset at the start of each year? (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)

ROI

Year   

1    _____ %

2   _____ %

3   _____ %

4   _____ %

Upper Division of Lower Company acquired an asset with a cost of $580,000 and a four-year life. The cash flows from the asset, considering the effects of inflation, were scheduled as follows:

The cost of the asset is expected to increase at a rate of 20 percent per year, compounded each year. Performance measures are based on beginning-of-year gross book values for the investment base. Ignore taxes. Required: a. What is the ROI for each year of the asset's life, using a historical cost approach? (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)

b. What is the ROI for each year of the asset's life if both the investment base and depreciation are determined by the current cost of the asset at the start of each year? (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)

Assume that on January 1, 2009, a parent company acquired a 90% interest in a subsidiary's voting common stock. On the date of acquisition, the fair value of the subsidiary's net assets equaled their reported book values. On January 1, 2011, the subsidiary purchased a building for $486,000. The building has a useful life of 10 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2013, the subsidiary sold the building to the parent for $420,000. The parent estimated that the building had an 8 year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. The parent's "stand-alone" income (i.e., net income before recording any adjustments related to pre-consolidation investment accounting) is $500,000. The subsidiary's recorded net income is $115,000.

Intercompany sale of depreciable assets
Consolidated net income attributable to the controlling interest:

$578,930

Please show your calculation.