Lucy Group moves to fulfil its new strategy to increase the number of its subsidiaries globally. Lucy Group is an Australian Business Developer that assists companies to develop their markets. In the first phase of its growth strategy, two new subsidiaries must open and run in China and Portugal. Lucy Group decides to ask its employees working in the US and Australia to consider a relocation to China, to help fill managerial positions and maintain the company's high standards for customer service. The plea for applicants outside China indicates a level of urgency that overrides the complexities of sending the US employees abroad. And yet, despite the complications, Senior Vice President of international business Mark Smith says about ten employees from the US and five employees from Australia with a diverse background in terms of ethnicity, age and gender, as well as nationality have already offered to make the trip to China and Portugal, indicating that the job offers may be lucrative. These candidates can be categorised broadly into two: American born Chinese and Australian born Indian. The expansion of Lucy Group into China and Portugal is testing the company's ability to find, recruit, hire and train employees infused with the company's culture that promotes a high level of customer service. The simple solution might seem to rest with the large pool of existing senior employees in the United States and Australia. But there are hurdles, the first of which is language. Lucy Group branch in China fall mainly within a Mandarin-speaking geographic territory, but there are many local dialects within China that American and Australian employees do not likely speak. A major factor for both the company and employees is a proper compensation package. It must consider the sacrifices of working abroad, the exchange rate of the two currencies, income tax rates and the costs of housing. Lucy Group might be providing relocation and local transportation allowance and paying for periodic visits back to the US or Australia, especially if the employee left behind a family. A non-trivial consideration for employees working in China is health care benefits, including for unexpected illness or injury. But there might also be some Lucy Group compensation for the long- term effects of living and working in cities with chronic air pollution above international standards. In contrast, there are no extra health care benefits for an expatriate who will move to Portugal. Besides, if Lucy Group considers recruiting local Chinese educated in the US Universities, there will not be extra health care benefit. One month before the departure, Lucy group provides expatriate with two books: One about Mandarin and Portuguese languages and one related about business in China and Portugal to transfer some preliminary knowledge about the general business context of these countries. However, expatriates struggled to connect their readings on Portuguese and Chinese culture and 1. Discuss the impact of political, economic, social and technological factors on Lucy Group subsidiaries in China and Portugal. Analyse countries cultural differences and how these differences influence IHRM practices. 2. Explain how you will manage the institutional effects on expatries in the Portugal and China subsidiaries.