XCO CHINA CASE STUDY

XCO CHINA CASE STUDY
Case discussion Questions
1. Why do you think John Ross ‘prior expatriate experience failed to prepare him for the task of managing XCO China?
I consider that John Ross prior experience may failed in China because the Asian culture differed a lot from Mexico and Hungarian culture and he did not have a cultural training for Asian markets. If you are assigned to work overseas you need training in the culture of the place where you are going.
In his previous experience, Ross probably did not face the difficulty of having to consult with partners from the other country. For example, Ross wanted to cut the workforce but XCO’s partners objected.
I also think that Ross was not prepared for the low skill level of the Chinese workforce. He did not take in consideration that he would need to keep training the employees continually to improve productivity.
Ross was not aware that XCO China was not using the latest developments in manufacturing technology in their operation.
It is also clear that the goals set by XCO America were not the same as those of XCO China. The goal of XCO America was to maximize profits while XCO Chinese sought to maximize employment opportunities.
2. What does the experience of XCO with American expatriates tell you about the problem of working abroad and about the difficulties using home-country employees to transfer valuable knowledge with a multinational firm ?
XCO US did a poor job in selecting the employees that were sent to China. The HR division should have looked for employees who showed better expatriate adaptability and better skills to transmit their knowledge to foreigners. In this case it is clear that lack of communication skills and failure to adapt to the Chinese environment doomed this effort.
3. In order to transfer knowledge, why was it apparently more effective to take Chinese employees to the United States, and then transfer them back home, than it was to use U.S. expatriates?
They definitely did a better selection in this case, and they were able to choose the employees that were more motivated to obtain and transfer the knowledge to their coworkers. There was no barrier to communication and the transmission of knowledge to co-workers was facilitated.
4. How might XCO ‘s performance appraisal system be adjusted so that Ross gets credit , if it is deserved, for the difficult work that he is doing in China, work that is not reflected in level of performance at XCO China that matches XCO’s operations elsewhere ?
I think the goals should be set differently, according to the particularly circumstances in each the subsidiaries. They mentioned in the article that the corporate goal is a 20% return. They should definitely reevaluate this goal in the China subsidiary, because of the multiple challenges it faces.
When evaluating the efforts of a general manager, the full scope of challenges faced and outcomes achieved must be assessed. Focus exclusively on investment returns is not the proper way to evaluate performance. XCO US should diversify evaluation criteria for new markets to consider improved technology, improved inventory and improved productivity.