International Trade: Gaining a Competitive Edge - Essay Sample

Introduction

International activities provide many advantages in businesses, including creating a competitive advantage. International activities involve the processes set in place to promote the growth of companies by transferring goods, resources, technologies, people, and services from one state to another through the art of import and export trade. Competition levels increase in an institution due to the influence of international activities since an organization that is part of the import and export trade is more productive than one that involves an internal business. The presence of many organizations offering similar products and services make it a challenge for each company to be on the top scale performance (Noe, 2017). Therefore, importing goods from a country that produces the best is prone to help a company acquire more consumers providing a competitive advantage.

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Considerations to Take When Designing International Compensation Programs

International compensation programs involve plans structured by an employer on the ways of providing rewards, incentives, and allowances to an employee once they accept an international assignment/job. While designing the international compensation programs, it is vital to put a few things into consideration. The local and international laws plus customs need reviewing to ensure that compensating individuals for their services does not involve breaking any rules. The type of compensation provided to an individual needs consideration since the design for premiums and allowances, salary, plus incentive compensations differ vastly. As such, finding out the differences and implementing them while structuring the compensation programs helps avoid making mistakes and show massive appreciation to individuals receiving the compensation (Cavusgil et al., 2014). Besides, the performance of individuals when structuring international bonuses need consideration. Therefore, when creating international compensation programs, the plan needs to include the variation in reimbursing individuals depending on their productivity, satisfying their obligations, and performance improvement. People with high productivity, performance, and fulfill their roles ought to receive high compensation for their services when compared to those with low performance, productivity and do not satisfy all their obligations. The competitiveness of the international compensation program needs consideration; thus, attract, retain, and motivate highly qualified personnel. Equal treatment of individuals from third-countries, expatriates, and hosts in a state needs to be in an international compensation program.

Components of an International Compensation Program

Within the international compensation program, its components help ensure that international employees are at a sufficient level financially, thus sustain their ground economically. When well-compensated, international employees can efficiently complete their tasks and be highly productive (Cavusgil et al., 2014). Basic salary, allowances, Foreign Service inducement/premium, benefits, and tax equalization payments are the components of an international compensation program. Expatriates receive a basic salary as an allowance package catering for housing and utility allowance, cost of living allowance, pension contributions, and in-service benefits, plus Foreign Service premium. Foreign Service premium/inducement is a compensation component offered to nationals of a particular country when receiving an international assignment and catering for any challenges during a transfer.

Allowances as compensation are granted to expatriates in different forms. Allowances include housing allowance, cost of living allowance, relocation allowance, a leave, and travel allowance, together with an education allowance for an employee's children. Benefits as components of an international compensation program are additional packages that a foreign employee receives depending on the initial agreement due to the type of services that one offers to an organization. Tax equalization payments as a component help protect an expatriate from any arising tax issues when working in a foreign state (Tornikoski et al., 2014). For that reason, when designing an international compensation program, there is the inclusion of a tax equalization plan to standardize an employee's basic income in including tax payment equal to the value paid from one's home country. Hence, the tax is not more or less than the amount billed in an individual's home country.

Balance Sheet Approach for US Expatriates’ Compensation Packages

A balance sheet approach for US expatriates' compensation packages helps ensure that employees can maintain their purchasing power at home despite being on an assignment internationally for a temporary basis (McNulty, 2014). The balance sheet approach also ensures that individuals continue receiving pay in their home town while completing an international job. According to the balance sheet approach, employees receive allowances that help meet the expense of housing, buy goods and services plus pay for income taxes as a host and those from home. Despite the duration, one works internationally; the provided allowances consider the exchange rates and inflation changes within the individual's home country. The use of a balance sheet approach is dependent on the agreements between an organization and its employee (Cavusgil et al., 2014). Using the balance sheet approach helps ensure that the employee is comfortable and motivated enough to be extremely productive. Further, eradicating pay barriers helps organizations reduce extra charges while offering payment due to providing tools that quicken and ease implementations.

Conclusion

Thus, through international activities, there is the creation of competitive advantage due to the presence of policies that support the production of high-quality goods for selling at high prices in the market. The brand of most goods, which are high quality, have policies involving the goods sales to be at high prices. Due to the sufficient quality of products and brands, a company involved in such international activities is prone to attain many customers due to the products serving the needs of the target market (Cavusgil et al., 2014). As such, the productivity, profitability, and competitiveness of the organization improve. Therefore, international activities help expand the marketing of goods, increase productivity, and help improve the production of products with excellent quality.

References

Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International business. Pearson Australia.
https://books.google.co.ke/books?hl=en&lr=&id=KcSaBQAAQBAJ&oi=fnd&pg=PP1&dq=DESIGNING+COMPETITIVE+INTERNATIONAl+COMPENSATION+PROGRAMS+&ots=mzViU1FWWx&sig=xZIew0iDpm8oJFKJQbngK3Qs9OA&redir_esc=y#v=onepage&q=DESIGNING%20COMPETITIVE%20INTERNATIONAl%20COMPENSATION%20PROGRAMS&f=false.

McNulty, Y. (2014). The opportunity costs of local-plus and localization approaches to expatriate compensation. L. Berger and D. Berger (Eds, 6th Edition). The Compensation Handbook. Columbus, OH: McGraw-Hill Education.

Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2017). Human resource management: Gaining a competitive advantage. New York, NY: McGraw-Hill Education. http://s3.amazonaws.com/prealliance_oneclass_sample/e5kKbwZMpg.pdf.

Tornikoski, C., Suutari, V., & Festing, M. (2014). Compensation package of international assignees. The Routledge companion to international human resource management, 289-307.
https://books.google.co.ke/books?hl=en&lr=&id=F0hWBQAAQBAJ&oi=fnd&pg=PA289&dq=Components+of+an+International+Compensation+Program&ots=LWKjqtyVc8&sig=PySflXGXoDvRJmAvL4bn49nWN5g&redir_esc=y#v=onepage&q=Components%20of%20an%20International%20Compensation%20Program&f=false.