Chapter 16 International Pay Systems Full Test Bank Newman

Chapter 16

International Pay Systems

Multiple Choice Questions

_____ is an example of a country with a highly decentralized approach to pay setting with higher wage flexibility.

Sweden

Germany

Belgium

D.	The United States of America

According to Hofstede's cultural dimensions, in Malaysia and Mexico, where there is high power distance, _____ pay structures are appropriate.

equitable

B.	hierarchical

C.	egalitarian

parallel

KayLeaf Inc. wants to set up a unit in China. To facilitate this, it sends its manager to China to gather information. Which of the following is most likely to be a suggestion from its manager?

A.	Use a hierarchical pay structure as there is high power distance in China.

B.	Use individual spot awards rather than stock options in the pay mix as the people in China have a long-term orientation.

C.	Use incentives linked to individual performance as China has a collectivistic culture.

D.	Have a rigid structure as the people in China have the highest level of uncertainty avoidance.

Uncertainty avoidance is _____.

A.	the distribution of emotional roles between the genders

B.	the extent to which a culture programs its members to accept delayed gratification of their material needs

C.	the extent to which the less powerful members of organizations accept and expect that power is distributed unequally

D.	the extent to which a culture programs its members to feel either uncomfortable or comfortable in unstructured situations

Individualism is _____.

A.	the degree to which people are supposed to look after themselves or remain integrated into groups, usually around the family

B.	the distribution of emotional roles between the genders

C.	the extent to which a culture programs individuals to accept delayed gratification of their emotional needs

D.	the extent to which a culture programs individuals to feel either uncomfortable or comfortable in unstructured situations

Which of the following countries has the highest number of people in the workforce belonging to unions?

Japan

Sweden

Italy

D.	South Korea

Which of the following statements about ownership and financial markets is true?

A.	In the United States, corporate ownership and access to capital is far more concentrated than in most other countries.

B.	Ninety percent of American households own stock in companies either directly or indirectly through mutual funds and pension funds.

C.	Recent tax law changes in many countries have made stock options more attractive, but limited ownership of many companies remains the rule.

D.	Large conglomerates in Germany link performance bonuses to increased shareholder value as it is the most effective pay system.

The degree of discretion managers have to make total compensation a strategic tool is referred to as _____.

A.	managerial accountability

B.	democratic accountability

C.	managerial autonomy

D.	managerial liability

In the comparison of the pay systems of two well-known Japanese companies Toyota and Toshiba, Toyota _____.

A.	places greater emphasis on external market rates

B.	places lesser emphasis on individual-based merit pay

C.	uses far more levels in its structure

D.	places lesser emphasis on individual-based performance pay

10.

Traditionally, Japan's employment relationships were supported by _____.

A.	lifetime security within the company

B.	performance-based pay systems alone

C.	centralized unions representing workers across several companies within an industry

D.	performance-based promotion systems alone

11.

Which of the following is a factor determining base pay in the Japanese traditional national system?

A.	Job evaluation

B.	Career category

C.	Market pricing

D.	Specific job title

12.

Bonuses paid in Japan are _____.

A.	additional pay equivalent to two weeks of annual salary

B.	typically paid once a year

C.	not an expectable additional payment

D.	not necessarily related to performance

13.

Which of the following is NOT true of the tariff agreements in Germany?

A.	Small organizations use them as guidelines.

B.	Managerial jobs are covered by the agreements.

C.	Job evaluation methods are part of the agreements.

D.	Tariff agreements are different for each industrial sector.

14.

In Japan, internal alignment based on _____ is far more important than other factors.

skills

jobs

C.	accountabilities

seniority

15.

Slow growth and competition has led Japanese companies to

A.	use more performance-based pay.

B.	focus on maintaining lifetime employment rather than long-time employment.

C.	switch over to seniority-based pay.

D.	offer benefits such as gyms, dating services, and exotic vacations.

16.

Which of the following statements about evolution and change in the traditional German model is true?

A.	Nearly one in 10 German adults owns stock.

B.	High birth rates are pushing up the costs of the social support system.

C.	A relatively flexible labor market means that employers are finding it easier to move to other EU countries.

D.	Many of the changes in Germany are the result of global competitive pressures and technological changes.

17.

A(n) _____ approach to compensation involves designing a total pay system at headquarters and applying it globally.

delayered

B.	inpatriate

localizer

exporter

18.

A Japanese citizen working for Toyota in Georgetown, Kentucky, is a _____.

A.	host-country national

B.	third-country national

C.	parent-country national

D.	local country national

19.

An Indian citizen working for a Japanese company in India is a _____.

A.	foreign country national

B.	third-country national

C.	parent-country national

D.	local country national

20.

A Korean citizen working for Toshiba, a Japanese company, in Canada is a _____.

A.	host-country national

B.	third-country national

C.	parent-country national

D.	local country national

21.

Which of the following is true of hiring LCNs?

A.	Companies incur relocation expenses and other substantial expenses associated with the use of LCNs.

B.	Companies have to be concerned about LCNs' adapting to the local culture.

C.	Only rarely do organizations decide that hiring LCNs is appropriate.

D.	Employment of LCNs satisfies nationalistic demands for hiring locals.

22.

KYZ Inc., a U.S. firm, sends its manager, Ryan, to London to manage its operations there. Ryan's salary is still based on the U.S pay system, however KYZ offers him a lump-sum payment to offset the additional standards-of-living expense in London. In this case, which of the following approaches to expatriate compensation is used by KYZ?

A.	The cafeteria approach

B.	The localization approach

C.	The local plus approach

D.	The balance sheet approach

23.

The base salary plus incentives for expatriates is usually determined by _____.

A.	job evaluation

B.	market pay

C.	competitors' pay level in the host country

D.	international pay schedules

24.

When taxes are deducted from employees' earnings up to the same amount of taxes they would pay had they remained in their home country, it is known as _____.

expat tax

B.	tax equalization

C.	compensatory tax

D.	tax protection

25.

Which of the following approaches seeks to ensure that employees on overseas assignments have the same spending power as they would in their home country?

A.	The assets-liability approach

B.	The balance sheet approach

C.	The compensatory tax approach

D.	The income statement approach

26.

Which of the following statements is true of the localization approach to expatriate compensation?

A.	It is more expensive than the balance sheet approach regardless of the location.

B.	It ties salary to the host country's salary scales.

C.	It ties salary to the home country's salary scales.

D.	It ensures that the expatriate's pay is equalized without the need for relocation bonuses.

27.

MayFly Inc., a firm headquartered in Paris, France, sends one of its employees to Frankfurt, Germany and Barcelona, Spain to manage its operations in these cities. The employee would be required to alternate between the two cities every six months. Mayfly offers only a moving expense on top of the base pay as the employee would be moving only within the European Union countries. Which of the following approaches to expatriate compensation is exemplified in this situation?

A.	Modified balance sheet approach

B.	Localization approach

C.	Local plus approach

D.	Lump-sum/cafeteria approach

28.

Which of the following ties salary to a region?

A.	The cafeteria approach

B.	The localization approach

C.	The modified balance sheet approach

D.	The lump-sum approach

29.

_____ sets salaries according to the home-country system and simply offers employees lump sums of money to offset differences in standards of living.

A.	The modified balance sheet approach

B.	The localization approach

C.	The cafeteria approach

D.	The balance sheet approach

30.

Which of the following is NOT true of expatriates?

A.	68 percent of expatriates do not know what their jobs will be when they return home.

B.	Only five percent of expatriates believe their company values their overseas experience.

C.	11 percent are promoted when they return.

D.	49 percent of U.S. expatriates are women.

True / False Questions

31.	Understanding international compensation begins with recognizing differences and similarities and figuring out how to best manage them. True False

32.	Evidence indicates that MNCs are influenced by both the institutional pressures in their home country and in the local context. True False

33.	Companies in the United States, United Kingdom, and some central European countries are most likely to have centralized wage bargaining. True False

34.	Neither works councils nor co-determination are legally required in the United States and are quite rare. True False

35.	In Malaysia and Mexico, egalitarian pay structures fit best with the culture. True False

36.	A study of both U.S. and Slovenian MBAs found that risk taking was higher among Slovenians. True False

37.	The country with the highest unionization rate in Europe is France, where 90 percent of workers are union members. True False

38.	Unionization rates are higher in Europe than in Asia. True False

39.	In China, while state-owned enterprises employ two-thirds of all workers, wholly privately owned enterprises, joint ventures with foreign companies, and WOFEs account for half of all profits. True False

40.	Generally, it is difficult to compare total compensation of a U.S. firm with a foreign competitor. True False

41.	It is easier and less complex to compare living costs across countries than total compensation. True False

42.	Japanese pay systems are more person-based than job-based. True False

43.	Japanese pay systems typically emphasize pay based upon competitors' market rates rather than internal alignment. True False

44.	Base pay for a Japanese employee is usually not based on job evaluation or market pricing. True False

45.	Since the Japanese system is so seniority-based, labor costs decrease as the average age of the workforce increases. True False

46.	According to the Japan Institute of Labour, for most employees bonuses are variable pay that help control the employer's cash flow and labor costs. True False

47.	In Germany, an employee's pay is affected by his or her age. True False

48.	Only 5 percent of U.S. expatriates believe their company values their overseas experience. True False

49.	Approximately 20 percent of expats leave their company within a year of their return to the U.S. True False

50.	77 percent of expats have less disposable income when they return home from overseas assignments. True False

Short Answer Questions

51.	Briefly summarize the degree to which the social contract constrains the employment relationship in organizations with an example.

52.	Explain the dimensions of national cultural attributes proposed by Hofstede.

53.	How do the differences in the ownership and financing of companies around the world impact international pay?

54.	Distinguish between parent-country nationals, local-country nationals, and third-country nationals with examples.

55.	What is the balance sheet approach? What is its objective?

Document Information

Document Type:

DOCX

Chapter Number:

Created Date:

Aug 21, 2025

Chapter Name:

Chapter 16 International Pay Systems

Author:

Jerry Newman

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