Managers and the Legal Environment 7th Edition by David Madsen, Constance Bagley

Exercise 5

Assume the facts in Question 3. You begin to consider the labor force that the joint venture will need. Ayantuga suggests that the venture technicians should make regular technical training visits to Optomagic's facility in Boston, Massachusetts. Ayantuga also suggests that he can arrange to select the Varoomian technicians for the joint venture. Monthly salaries in Varoom for the relevant types of workers are 70% lower than in the United States. However, Varoom's labor laws require that all enterprises (1) provide employees with housing and health insurance subsidies equal to 50% of their salaries; (2) engage in mandatory arbitration with the local labor bureau prior to termination of any employee for any reason; and (3) in the case of foreign-invested enterprises, pay local managers salaries and benefits that are comparable to those of the expatriate management personnel of the foreign-invested enterprise.
a. How would you assess the legal and economic advantages and disadvantages of the employees that Ayantuga has proposed be hired?
b. Is there another way to structure the workforce?
c. What U.S. laws may apply to the training of joint venture technicians at Optomagic's U.S. facilities?
d. Would you recommend that resident expatriate management personnel, or just visiting technicians, be assigned to the prospective project? Why? What qualities do you think an expatriate employee in Varoom should have?