Discuss the advantages and disadvantages of using locals to staff international subsidiaries
What will be an ideal response?
There are a number of advantages to using locals to staff international subsidiaries. Using locals may lower labor costs, demonstrate trust in local citizenry, increase acceptance of the company by the local community, maximize the number of options available in the local environment, lead to recognition of the company as a legitimate participant in the local economy, and effectively represents local considerations and constraints in the decision-making process. However, using locals may make it difficult to balance local demand and global priorities, lead to postponement of difficult local decisions until they are unavoidable, may make it difficult to recruit qualified personnel, and may reduce the amount of control exercised by headquarters.
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The efficient frontier
A) is represented by the rightmost boundary of the feasible set of portfolios. B) represents the best attainable tradeoff between risk and return. C) includes all feasible sets of portfolios based on risk and return characteristics. D) provides the highest level of risk for the lowest level of return.
The owner of a hair salon spends $1,000,000 to renovate its premises, estimating that this will increase her cash flow by $220,000 per year
She constructs the above graph, which shows the net present value (NPV) as a function of the discount rate. If her discount rate is 6%, should she accept the project? A) Yes, because the NPV is positive at that rate. B) No, because the NPV is negative at that rate. C) No, because the NPV is positive at that rate. D) Cannot be determined from the information given.