In May 2016, Mark Hopkins, managing director of Tel-Comm-Tek (TCT) India, a subsidiary of a U.S....

    

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In May 2016, Mark Hopkins, managing director of Tel-Comm-Tek (TCT) India, a subsidiary of a U.S. MNE, announced his retirement. During his tenure, Hopkins had overseen the rising growth, market share, and profitability of the Indian operation. Upon his announcement, TCT began searching for his replacement. TCT manufactures office equipment, such as photocopiers, laser printers, and document shredders, in 13 countries that are then sold worldwide. Most recently, it reported sales in 83 countries. TCT entered India in 2005, initially relying on local agents to sell and service its imported products. Increasing sales led TCT to open a marketing subsidiary in New Delhi in 2010. TCT's sales have steadily risen, in tandem with the booming Indian IT industry. Forecasts saw sales accelerating, fueled by demand from local companies, such as Infosys, Tata, and Wipro. TCT USA projected India's becoming the center point of its expanding Asian operations. In 2015, TCT made plans to add a local manufacturing facility to its Indian operations. India: An Emerging Juggernaut Fast Growth Some see India developing into the world's next big industrial power. This view leads many MNEs to expand their Indian operations. For example, IBM, a longtime customer of TCT, has steadily boosted its Indian headcounts from a handful in 1998 to approximately 150,000 today. TCT expects India's growth will push its total sales past those of the United States by 2024. Improving Infrastructure The expanding Indian transportation network spurred expanding TCT India's strategy. Improving highways, railways, and ports boost logistic efficiencies. Management sees TCT India becoming a vital link in its global supply chain and, longer term, the hub of its Asian network. Political Economy From 1947 through 1990, India had a centrally planned economy. Government control, rather than free- market ideals, led to the notorious "License Raj," a situation marked by extensive regulations that were administered by an opaque bureaucracy. In 1991, a balance-of-payments crisis forced India's hand. The government began liberalizing the economy, scrapping burdensome regulations and boosting investment, trade, and operating freedom. Its transition, an ongoing process, stabilized the economy and improves India's market attractiveness. Confident of continuing liberalization, TCT decided to invest in a manufacturing unit. Labor Laws Notwithstanding steady deregulation, India's restrictive labor laws pose problems. They prohibit companies, for example, from letting manufacturing workers clock more than 54 hours of overtime in any three-month period-even if workers are willing. India's Industrial Disputes Act requires a company employing 100 or more workers get the state's authorization before firing anyone, no matter how dire the situation 185 Permission typically hinges on extensive negotiations and settlements. Consequently, "companies think twice, 10 times, before they hire new people," said the CEO of India's Hero Group 186 Industry Regulation Various laws, largely designed to protect the millions of small enterprises operating in scattered villages, restrict MNEs from competing in many Indian industries. High tariffs pose other challenges. Instituted long ago to promote domestic production, they still apply to many imports. Minimizing tariff exposure spurs TCT to make products locally. Legal Legacies Although a functioning democracy, corruption mars India's business environment. Transparency International 2015, for instance, ranked it 85 of 175 countries in terms of the misuse of public power for private benefit. 187 Its legal system, though endorsing the rule of law, struggles with the problems posed by its vast bureaucracy-a legacy of its centrally planned economy and the infamous License Raj. Regulatory transparency has improved, but has far to go. High-tech MNEs have struggled to protect intellectual property rights. Damn the Torpedoes, Full Speed Ahead In early 2017, TCT began building a factory in Bengaluru, the center of India's Silicon Valley. The plant will make entry-level to high-end laser printers, with the first production run set for March 2018. Local shortages of quality components require initially sourcing inputs from TCT's U.S. facilities. Several of these inputs face high tariffs. Ultimately, TCT India plans to make these parts locally. TCT India initially planned to hire 75 to 90 workers to run its assembly line. It anticipates no problems recruiting skilled labor given demographic and educational circumstances. For example, when the South Korean conglomerate LG looked to staff 458 assembly-line jobs at its just-opened Indian factory, it required applicants to have at least 15 years of education-a condition that translates into having both high school and technical college certification. Too, preferring a young workforce, LG sought workers with some, but not much, previous experience. Ultimately, some 55,000 people qualified for interviews. Likewise, millions regularly apply for slots at prominent Indian IT MNEs.188 TCT enlisted a Japanese engineering firm to supervise construction of its Bengaluru plant. Upon completion, Gary Kent will temporarily move from TCT's USA laser printer factory in the role of production supervisor. He will jointly report to TCT's U.S. headquarters as well as TCT India's managing director in New Delhi (the position made vacant by Hopkins's retirement). Once the plant is certified, Mr. Kent will return to the United States and his replacement will report directly to the managing director of TCT India. Selecting the Managing Director TCT applies a geocentric staffing framework, mixing home-, host-, and third-country nationals to staff international operations. It fills executive vacancies by promoting the best-qualified candidate from within; a key criteria is openness to developing a global mindset. It also rotates managers among its foreign and U.S. locations, believing that international experience is a key facet of leadership. Generally. ambitious executives must successfully complete an expatriate assignment before contending for a C- level position. The Candidates TCT USA charged its Asian Regional Office to select the Managing Director for TCT India. The Director commissioned a committee, consisting of manufacturing, marketing, logistics, and administrative representatives, to rank order the following candidates: . . Atasi Das: Born in the United States, Das joined TCT nine years ago after earning her MBA from a university in New England. At 38, she has successfully moved between staff and line positions and assumed broader responsibilities in strategic planning. For two years, she was the assistant director of a midsized product group. Her performance regularly earns excellent ratings. Currently, she directs supply-chain logistics from TCT's home office. Upon joining TCT, she stated her goal was to work internationally, pointing to her undergraduate major in international management. She has reiterated her interest in international responsibilities and her interest in continuing with TCT, but was not averse to looking elsewhere. She speaks Hindi and is unmarried. Her parents, who now live in the United States, are first-generation immigrants from India. She has relatives in India's northern states, Kashmir and Punjab. Brett Harrison: Harrison, 44, has spent 15 years with TCT running both line activities and supervising staff. His superiors consider him a seasoned executive poised to move into upper-level management. For the past three years, he has worked in the Singapore-based Asian Regional Office and regularly tours TCT's Asian operations. He and his wife, along with their two teenage children, have traveled to India a few times and are familiar with its geography, politics, customs, and outlooks. The Harrisons know other expats in the Bengaluru region. Mrs. Harrison works as the marketing director for the Singapore subsidiary of a Japanese pharmaceutical company. It presently does not have an operating unit in India. Jalan Bukit Seng: Seng, 52, is the managing director of TCT's assembly operation in Malaysia. A citizen of Singapore, he has spent his career in Singapore or Malaysia. He regularly commutes to various TCT factories, helping to upgrade assembly systems and supervising equipment refits. He earned an undergraduate and MBA degrees from the National University of Singapore and speaks Singapore's four official languages-Malay, English, Mandarin, and Tamil. His performance reviews are consistently positive, with a periodic ranking of excellent. Seng is unmarried but has family members in Singapore and Malaysia. Ravi Desai: Currently an assistant managing director in TCT India, Desai oversees local market activity. A citizen of India, he has spent 11 years with TCT, primarily working in India, but also working, short-term, in the Japanese and Australian units as a flexpatriate. Now 37, he holds an MBA from the prestigious Indian Institute of Management. He is married, has two children (ages 2 and 7). and speaks English and Hindi as well. His wife, also a native of India, neither works outside the home nor speaks English. Saumitra Chakraborty: At 36, Chakraborty is an executive assistant to the departing managing director in India. He has held that position since joining TCT India upon graduating from Oxford University. He consistently earns a job performance rating of excellent in customer relationship management. He has increased TCT India's sales, largely owing to his connections with prominent Indian families and government officials, along with his skillfulness in the ways of the Indian business environment. Besides speaking India's main languages of English and Hindi, Chakraborty is the only candidate who speaks Kannada (the local language of Bengaluru). Presently, he lacks line experience. Tom Wallace: A 30-year TCT veteran, Wallace has broad technical skills and sales experience. He has worked with Gary Kent on supply-chain projects in the United States. Although he has never worked abroad, he has periodically toured TCT's foreign operations. He recently expressed interest in an expatriate slot. His superiors typically rate his performance as excellent. Wallace is set to retire in seven years. He and his wife speak only English. They have three adult children who live with their own families in the United States. Presently, Wallace manages a U.S. unit that is a little larger than the present size of TCT India. The merger of his unit with another TCT division will eliminate his current position in nine months. Questions 1. 20-3. Identify the key advantage of each of the six candidates. Identify their key limitation. Rank- order the candidates, from the most to least qualified, for the position of Managing Director of TCT India. 2. 20-4. What operational and personal challenges might the person you recommend encounter if named managing director? 3. 20-5. What steps would you recommend your preferred candidate take to manage those challenges? 4. 20-6. What are the pros and cons of posting a foreign national versus an Indian-born candidate to the position of Managing Director? In May 2016, Mark Hopkins, managing director of Tel-Comm-Tek (TCT) India, a subsidiary of a U.S. MNE, announced his retirement. During his tenure, Hopkins had overseen the rising growth, market share, and profitability of the Indian operation. Upon his announcement, TCT began searching for his replacement. TCT manufactures office equipment, such as photocopiers, laser printers, and document shredders, in 13 countries that are then sold worldwide. Most recently, it reported sales in 83 countries. TCT entered India in 2005, initially relying on local agents to sell and service its imported products. Increasing sales led TCT to open a marketing subsidiary in New Delhi in 2010. TCT's sales have steadily risen, in tandem with the booming Indian IT industry. Forecasts saw sales accelerating, fueled by demand from local companies, such as Infosys, Tata, and Wipro. TCT USA projected India's becoming the center point of its expanding Asian operations. In 2015, TCT made plans to add a local manufacturing facility to its Indian operations. India: An Emerging Juggernaut Fast Growth Some see India developing into the world's next big industrial power. This view leads many MNEs to expand their Indian operations. For example, IBM, a longtime customer of TCT, has steadily boosted its Indian headcounts from a handful in 1998 to approximately 150,000 today. TCT expects India's growth will push its total sales past those of the United States by 2024. Improving Infrastructure The expanding Indian transportation network spurred expanding TCT India's strategy. Improving highways, railways, and ports boost logistic efficiencies. Management sees TCT India becoming a vital link in its global supply chain and, longer term, the hub of its Asian network. Political Economy From 1947 through 1990, India had a centrally planned economy. Government control, rather than free- market ideals, led to the notorious "License Raj," a situation marked by extensive regulations that were administered by an opaque bureaucracy. In 1991, a balance-of-payments crisis forced India's hand. The government began liberalizing the economy, scrapping burdensome regulations and boosting investment, trade, and operating freedom. Its transition, an ongoing process, stabilized the economy and improves India's market attractiveness. Confident of continuing liberalization, TCT decided to invest in a manufacturing unit. Labor Laws Notwithstanding steady deregulation, India's restrictive labor laws pose problems. They prohibit companies, for example, from letting manufacturing workers clock more than 54 hours of overtime in any three-month period-even if workers are willing. India's Industrial Disputes Act requires a company employing 100 or more workers get the state's authorization before firing anyone, no matter how dire the situation 185 Permission typically hinges on extensive negotiations and settlements. Consequently, "companies think twice, 10 times, before they hire new people," said the CEO of India's Hero Group 186 Industry Regulation Various laws, largely designed to protect the millions of small enterprises operating in scattered villages, restrict MNEs from competing in many Indian industries. High tariffs pose other challenges. Instituted long ago to promote domestic production, they still apply to many imports. Minimizing tariff exposure spurs TCT to make products locally. Legal Legacies Although a functioning democracy, corruption mars India's business environment. Transparency International 2015, for instance, ranked it 85 of 175 countries in terms of the misuse of public power for private benefit. 187 Its legal system, though endorsing the rule of law, struggles with the problems posed by its vast bureaucracy-a legacy of its centrally planned economy and the infamous License Raj. Regulatory transparency has improved, but has far to go. High-tech MNEs have struggled to protect intellectual property rights. Damn the Torpedoes, Full Speed Ahead In early 2017, TCT began building a factory in Bengaluru, the center of India's Silicon Valley. The plant will make entry-level to high-end laser printers, with the first production run set for March 2018. Local shortages of quality components require initially sourcing inputs from TCT's U.S. facilities. Several of these inputs face high tariffs. Ultimately, TCT India plans to make these parts locally. TCT India initially planned to hire 75 to 90 workers to run its assembly line. It anticipates no problems recruiting skilled labor given demographic and educational circumstances. For example, when the South Korean conglomerate LG looked to staff 458 assembly-line jobs at its just-opened Indian factory, it required applicants to have at least 15 years of education-a condition that translates into having both high school and technical college certification. Too, preferring a young workforce, LG sought workers with some, but not much, previous experience. Ultimately, some 55,000 people qualified for interviews. Likewise, millions regularly apply for slots at prominent Indian IT MNEs.188 TCT enlisted a Japanese engineering firm to supervise construction of its Bengaluru plant. Upon completion, Gary Kent will temporarily move from TCT's USA laser printer factory in the role of production supervisor. He will jointly report to TCT's U.S. headquarters as well as TCT India's managing director in New Delhi (the position made vacant by Hopkins's retirement). Once the plant is certified, Mr. Kent will return to the United States and his replacement will report directly to the managing director of TCT India. Selecting the Managing Director TCT applies a geocentric staffing framework, mixing home-, host-, and third-country nationals to staff international operations. It fills executive vacancies by promoting the best-qualified candidate from within; a key criteria is openness to developing a global mindset. It also rotates managers among its foreign and U.S. locations, believing that international experience is a key facet of leadership. Generally. ambitious executives must successfully complete an expatriate assignment before contending for a C- level position. The Candidates TCT USA charged its Asian Regional Office to select the Managing Director for TCT India. The Director commissioned a committee, consisting of manufacturing, marketing, logistics, and administrative representatives, to rank order the following candidates: . . Atasi Das: Born in the United States, Das joined TCT nine years ago after earning her MBA from a university in New England. At 38, she has successfully moved between staff and line positions and assumed broader responsibilities in strategic planning. For two years, she was the assistant director of a midsized product group. Her performance regularly earns excellent ratings. Currently, she directs supply-chain logistics from TCT's home office. Upon joining TCT, she stated her goal was to work internationally, pointing to her undergraduate major in international management. She has reiterated her interest in international responsibilities and her interest in continuing with TCT, but was not averse to looking elsewhere. She speaks Hindi and is unmarried. Her parents, who now live in the United States, are first-generation immigrants from India. She has relatives in India's northern states, Kashmir and Punjab. Brett Harrison: Harrison, 44, has spent 15 years with TCT running both line activities and supervising staff. His superiors consider him a seasoned executive poised to move into upper-level management. For the past three years, he has worked in the Singapore-based Asian Regional Office and regularly tours TCT's Asian operations. He and his wife, along with their two teenage children, have traveled to India a few times and are familiar with its geography, politics, customs, and outlooks. The Harrisons know other expats in the Bengaluru region. Mrs. Harrison works as the marketing director for the Singapore subsidiary of a Japanese pharmaceutical company. It presently does not have an operating unit in India. Jalan Bukit Seng: Seng, 52, is the managing director of TCT's assembly operation in Malaysia. A citizen of Singapore, he has spent his career in Singapore or Malaysia. He regularly commutes to various TCT factories, helping to upgrade assembly systems and supervising equipment refits. He earned an undergraduate and MBA degrees from the National University of Singapore and speaks Singapore's four official languages-Malay, English, Mandarin, and Tamil. His performance reviews are consistently positive, with a periodic ranking of excellent. Seng is unmarried but has family members in Singapore and Malaysia. Ravi Desai: Currently an assistant managing director in TCT India, Desai oversees local market activity. A citizen of India, he has spent 11 years with TCT, primarily working in India, but also working, short-term, in the Japanese and Australian units as a flexpatriate. Now 37, he holds an MBA from the prestigious Indian Institute of Management. He is married, has two children (ages 2 and 7). and speaks English and Hindi as well. His wife, also a native of India, neither works outside the home nor speaks English. Saumitra Chakraborty: At 36, Chakraborty is an executive assistant to the departing managing director in India. He has held that position since joining TCT India upon graduating from Oxford University. He consistently earns a job performance rating of excellent in customer relationship management. He has increased TCT India's sales, largely owing to his connections with prominent Indian families and government officials, along with his skillfulness in the ways of the Indian business environment. Besides speaking India's main languages of English and Hindi, Chakraborty is the only candidate who speaks Kannada (the local language of Bengaluru). Presently, he lacks line experience. Tom Wallace: A 30-year TCT veteran, Wallace has broad technical skills and sales experience. He has worked with Gary Kent on supply-chain projects in the United States. Although he has never worked abroad, he has periodically toured TCT's foreign operations. He recently expressed interest in an expatriate slot. His superiors typically rate his performance as excellent. Wallace is set to retire in seven years. He and his wife speak only English. They have three adult children who live with their own families in the United States. Presently, Wallace manages a U.S. unit that is a little larger than the present size of TCT India. The merger of his unit with another TCT division will eliminate his current position in nine months. Questions 1. 20-3. Identify the key advantage of each of the six candidates. Identify their key limitation. Rank- order the candidates, from the most to least qualified, for the position of Managing Director of TCT India. 2. 20-4. What operational and personal challenges might the person you recommend encounter if named managing director? 3. 20-5. What steps would you recommend your preferred candidate take to manage those challenges? 4. 20-6. What are the pros and cons of posting a foreign national versus an Indian-born candidate to the position of Managing Director?

Answer rating: 100% (QA)

1 Candidates Advantage Disadvantage Atasi Das MBA holder Experience in supplychain logistics Good kn... View the full answer