1. Compare GE’s approach to performance evaluation with that of ICI (mentioned in the chapter).

2. Critically evaluate the strengths and weaknesses of each company’s approach to the performance evaluation of its foreign managers as it relates to the problem of fluctuating currency values.

3. Which approach to performance evaluation do you support and why?

MINI CASE 

General Electric Company’s worldwide performance evaluation system is based on a policy of decentralization. The policy reflects its conviction that managers will become more responsible and their business will be better managed if they are given the authority and necessary tools to budget and achieve a targeted net income in dollar terms. Moreover, decentralization permits the company to overcome the difficulty of centrally exercising detailed control over its large and diverse operations. Foreign affiliate managers, like their domestic counterparts, are accountable for dollar income, a practice not followed by many MNCs. In the words of one financial executive, “Although many U.S. corporations are decentralized in their U.S. operations, they seem to be less so with regard to their foreign operations. One reason may be the concern as to whether foreign managers are sufficiently trained in some aspects of international finance, such as foreign exchange exposure management. We feel this is essential training, and our people get that training.”