HRMT 427 (Week 4 Case)

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1 Week 4 Case Study - Case 8.1 Working in a Sheltered Enclave in Shanghai, China Maylyn Castro American Public University HRMT427 International Human Resource Management

2 Week 4 Case Study - Case 8.1 Working in a Sheltered Enclave in Shanghai, China Case Study Background Information: In this case, David Smith, an electrical engineer working for an MNC (Multinational companies) in Detroit, reluctantly accepts an expatriate assignment in China, driven by his company's need for managerial talent and the promise of career advancement. Despite his initial reservations and limited knowledge of China, David's family relocates to Shanghai, where they live in an exclusive enclave reminiscent of American suburbia. This enclave offers a Westernized lifestyle, shielding them from many of the challenges of adapting to Chinese culture. However, as time passes, David begins to question the isolation of this enclave from the broader Chinese community and markets he is meant to learn about, prompting introspection about the nature of his expatriate experience. What are the potential reasons why David’s company would desire to send its own home country expatriate instead of using a local Chinese manager or third-country national? David's company may have several reasons for choosing to send its own home country expatriate, like David, to China instead of relying on a local Chinese manager or a third-country national. These reasons stem from the complexities of international business operations, talent scarcity, and the desire to ensure effective management and knowledge transfer in a foreign environment.

3 Firstly, cultural familiarity and corporate values can play a crucial role. Sending an expatriate from the home country ensures alignment with the company's culture, policies, and practices, thereby maintaining consistency and enhancing communication between headquarters and the subsidiary. This helps in upholding the company's identity and core values in a foreign market with potentially different business norms. Secondly, certain technical expertise and knowledge specific to the company might be required for the assignment. Expatriates often possess skills and insights gained from working within the organization for an extended period. This knowledge can be critical for setting up operations, managing new ventures, and ensuring smooth knowledge transfer to local employees. In contrast, local Chinese managers or third-country nationals might lack the deep understanding of the company's internal workings. Moreover, language barriers and cultural nuances can present challenges in international business. An expatriate from the home country can mitigate these challenges, ensuring effective communication and minimizing misunderstandings. This is particularly important for an assignment as crucial as setting up a new factory and training local managers. (Chen, 2019) Lastly, the company's long-term strategic goals might factor in. By sending an expatriate like David to China, the company can groom him for higher-level positions in the organization. This aligns with the company's commitment to globalization and enables the development of a global talent pool. In conclusion, David's company's decision to send its own home country expatriate reflects the need for seamless knowledge transfer, cultural alignment, technical expertise, and

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4 potential leadership development. These factors collectively contribute to the company's efforts to establish a strong presence in a foreign market like China while maintaining its corporate identity and strategic goals. Can you identify the family issues facing David’s family? David's family faces significant challenges and family issues as they contemplate David's expatriate assignment in China. These concerns are multi-faceted and encompass both practical and emotional considerations: Career Sacrifice for Linda: David's wife, Linda, is an accountant with a decent income in their home country. However, accepting the expatriate assignment means that Linda would have to quit her job. This decision forces Linda to make a sacrifice in her own career for the sake of David's professional advancement. This creates a dilemma for the couple as they navigate the complexities of work-life balance and financial stability. Educational Transition for Christopher: The couple's son, Christopher, is a second-grader at the time of their relocation. Finding a suitable and high-quality private school for Christopher in China becomes a critical concern. Adapting to a new education system, curriculum, and potentially a language barrier presents challenges for Christopher's educational continuity and well-being. Cultural and Social Adjustment: Moving to a foreign country with a vastly different culture can be emotionally and socially challenging for the entire family. The cultural adjustment

5 process may be particularly taxing for Linda and Christopher, who may face difficulties in establishing a sense of belonging and forming social connections. Isolation and Support System: The family's move to an exclusive enclave in Shanghai isolates them from the broader Chinese community. While this enclave offers a familiar Western lifestyle, it also limits the family's opportunities to fully engage with the local culture and community. This isolation can impact their emotional well-being and hinder their ability to build a strong support network. Long-Term Commitment: The assignment requires David to stay in China for at least three years to ensure the successful operation of the new factory. This commitment raises concerns about the family's long-term separation from their home country, extended family, and friends. It also implies that any challenges they face in China would need to be endured for a significant duration. (Koreman, 2018) Personal Growth and Development: The family members might face personal growth challenges, including learning to adapt to a new environment, managing cultural differences, and navigating everyday life in an unfamiliar setting. (Koreman, 2018) In conclusion, the family issues confronting David's family are intertwined with career sacrifices, educational transitions, cultural adjustments, emotional isolation, and the complexities of long-term commitment. These challenges underscore the profound impact of international assignments on not only the expatriate but also their family members, highlighting the need for careful consideration and support in such situations.

6 Do you see any longer-range pitfalls in the approach used by David’s company to carry out its HR (Human Resources) policy to attract the most qualified expatriates? The approach employed by David's company to attract highly qualified expatriates may bring short-term advantages, but it also carries potential longer-range pitfalls that warrant consideration. By consistently favoring expatriates from the home country, the company might inadvertently neglect the development of local talent in the host country, hindering the establishment of a sustainable and diversified workforce. Over time, this can lead to a dependence on expatriates for key roles and expertise, posing challenges when repatriating or replacing these expatriates and potentially limiting the growth of local employees. Another pitfall lies in the potential erosion of cultural sensitivity and adaptability. Relying solely on expatriates who share a similar cultural background may create a monoculture within the company, inhibiting its ability to understand and effectively navigate the nuances of the local market. This could lead to misalignment with local customer preferences, regulatory challenges, and a lack of innovation driven by diverse perspectives. Furthermore, this approach risks perpetuating a hierarchy between expatriates and local employees, potentially causing resentment, and hampering effective collaboration. The division can manifest in differences in compensation, benefits, and opportunities, which can demotivate local employees and create a sense of exclusion. This in turn might hinder knowledge sharing and hinder the company's ability to fully leverage the insights and understanding of local dynamics that local employees can provide.

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7 Longer-term success in a globalized market necessitates a blend of local expertise and international insights. Relying solely on expatriates could limit the company's agility and adaptability to changing circumstances, which are often better understood by those who have a deeper and long-term connection with the host country. Thus, the company could potentially miss out on fully harnessing the advantages of a diverse and inclusive workforce that represents various backgrounds, perspectives, and skill sets. (Black and Gregersen, 2016) In summary, while the approach of using expatriates to attract qualified talent has its immediate benefits, a lack of focus on developing local talent and fostering cultural diversity can lead to longer-range pitfalls. Striking a balance between expatriate expertise and local talent development is essential for sustainable growth and success in the host country's market.

8 Summary and Conclusion Summary of the Case and Lessons for Businesses Today In this case, David Smith, an electrical engineer, undertakes an expatriate assignment in China due to his company's need for managerial talent and his career advancement. He relocates to an exclusive enclave in Shanghai, which offers a Westernized lifestyle. However, he begins to question the isolation from the broader Chinese community and markets he is meant to learn about. Lessons for Businesses Today 1. Balancing Global Expertise and Local Integration: The case underscores the importance of striking a balance between leveraging the expertise of expatriates and integrating them into the local culture and market. Businesses today should prioritize cross-cultural training for expatriates to enhance their adaptability, communication skills, and understanding of local dynamics. This approach enables a deeper connection with the local community, fosters collaboration, and enhances the effectiveness of global operations. 2. Long-Term Local Talent Development: While expatriates bring valuable knowledge, businesses should also invest in developing local talent. Overreliance on expatriates can hinder the growth of local employees and limit the company's ability to respond to changing market conditions. By nurturing local talent and promoting their growth within the organization, businesses can create a sustainable workforce that understands local nuances and contributes to long-term success.

9 In conclusion, David's experience highlights the need for businesses to blend global expertise with local integration and talent development. Striking this balance ensures effective operations, cultural sensitivity, and sustainable growth in an increasingly interconnected and diverse business landscape.

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10 References Vance, Charles, and Yongsun Paik. Managing a Global Workforce, Taylor & Francis Group, 2014. ProQuest Ebook Central, https://ebookcentral.proquest.com/lib/apus/detail.action? docID=2058294 Koreman, I. (2018, June). The Influence of Family on the Expatriation Process. Menlo Security. https://safe.menlosecurity.com/doc/docview/viewer/docN5896FAEF328540c3565123965e 3a7291bc4f7f2fbf0210307e27a7183f64a7564ab9d7dd2d8b Chen, M. (2019, September 17). The impact of expatriates’ cross-cultural adjustment on work stress and job involvement in the high-tech industry. Frontiers. https://www.frontiersin.org/articles/10.3389/fpsyg.2019.02228/full Black, J. S., & Gregersen, H. (2016, April 29). The right way to manage expats. Harvard Business Review. https://hbr.org/1999/03/the-right-way-to-manage-expats

HRMT 427 (Week 4 Case)

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