Doing business in a foreign country
Companies operation in foreign markets has to contend
with differences between parent country and host country (Carbaugh, 2009, p.320).
Differences may be cultural, legal as well as institutional. As such, Canadian
companies operating in foreign countries must choose between using expatriate
employees from Canada or employees from the host country. Either choice has
advantages and disadvantages. Below are the advantages and disadvantages of
using employees from host country.
Advantages
First, local employees bring the benefit of having a
deeper knowledge of the local business scene (Scullion & Colligs, 2006,
pp.159-178). Knowledge of the business environment is a critical factor for the
success of any business. A Canadian company utilizing host country employees
will, therefore, be well placed to leverage on this advantage. Related to this
is the fact that host country employees are more likely to have established
connections in the businesses environment relative to their expatriate
counterparts.
Even more important for any business entity is the cost
of host country employees (Scullion & Collings, 2006, pp.159-178). It would
be relatively cheaper for a Canadian company to use local employees in foreign operations.
Canadian employees taken to such operations will have to be compensated for
such relocations. Besides, most of them will also need additional training on
various aspects of the destination country (Li, 2010, p.218).
In addition, the foreign operation stands to more
motivated staff if people work in their familiar environments (Scullion &
Collings, 2006, pp.159-178). Canadians relocating to these countries are more
likely to feel uprooted from their culture making adjustments costly to the
company. Besides, research indicates that employees are more productive when
they do not have to deal with cultural conflicts.
Disadvantages
The most challenging problem is that host country
employees may not be lacking in the appropriate skills needed for the
operations of the company (Storey, 2007, pp.357-359). This problem is
especially acute in situations where Canadian companies are operating in
developing countries. For instance, companies in high technology industries may
fail to get skilled personnel from these host countries.
Secondly, it may also be tricky to select people from
host countries where the Canadian company does not have established practice in
this area (Steers & Nardon, 2006, pp.283-284). Employee selection is an
important element in business success. A mistake in this area would, therefore,
cost the company in profits.
References
Carbaugh, R.J. (2009).International
Economics, Twelfth Edition.Mason, OH: South-Western Cengage.
Li,L.(2010).The Strategy of Talent Localization in
Multinational Corporations. International
Journal of Business Management, 5(12), 216-219.
Scullion, H.,&Collings, D. (2006).Global Staffing.London: Routledge.
Stears, R.M., & Nardon, L. (2006).Managing in the Global Economy. New
York: M.E Sharpe.
Storey, J. (2007).Human
Resource Management: A Critical Text, Third Edition.London: Thomson.
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