Question
When an employee is transferred to another country and is assigned a salary based on the base salary for that position in the country where he will work, the employer has used a _____ salary plan.
The correct answer is
host based
Understanding Host-Based Salary Plans
The question describes a scenario where an employee transferred internationally receives a salary determined by the local pay scale of the destination country (the country where they will work). This approach is known as a host-based salary plan.
- Host-Based Plan Definition: In this system, the employer sets the employee's salary based on the prevailing compensation rates and market standards in the host country for the specific role. The goal is to ensure the compensation is competitive and equitable within the local context.
- Scenario Alignment: The employee's salary is based on the "base salary for that position in the country where he will work," directly matching the definition of a host-based plan.
Evaluating Other Options
- Home-Based Salary Plan: This plan anchors the salary to the compensation structure of the employee's home country, which is contrary to the scenario described.
- Transfer Salary Plan: This is not a standard, distinct salary plan category. While a transfer involves salary adjustments, the *basis* for that adjustment defines the plan type (e.g., host-based).
- Cost-of-Living (COL) Adjustment: While COL considerations can be *part* of an international compensation package (and sometimes integrated into host-based or balance sheet approaches), the core definition provided focuses on the local market salary, not solely on COL differences. A purely COL-adjusted salary might differ from the local base salary.
Therefore, the employer has used a host-based salary plan.
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Important Questions from Business Environment and International Business
- Assertion (A) : The perceived risk of operating a domestic firm in international environment is much higher.
Reason (R) : The international environment is more volatile and the domestic firm generally does not have full information about the environment. - Match List – I (TNCs) with List – II (Products) using the codes given below :
List – I (TNCs) List – II (Products) a. Marcopolo i. Banking b. Bombardier ii. Oil c. Citygroup iii. Bus d. Bridas iv. Railway Coaches
Codes : - According to eclectic theory of foreign direct investment, foreign direct investment will occur under which of the following conditions when they are to be uniquely combined?
A. Ownership
B. Location
C. Market power
D. Internationalization
E. Vertical integration
Choose the most appropriate answer from the options given below : - Which of the following are included in Foreign Direct Investment?
A. Wholly owned subsidiary
B. Joint venture
C. Investment in GDR
D. Acquisition
E. Investment by FIIs
Choose the correct answer from the options given below: - Which of the following are the benefits of globalisation?
A. Increase in competition would make companies more cost & quality conscious and innovative.
B. An open economy spurs innovation with fresh ideas from abroad.
C. Liberalisation & global competition enhances consumer choice and consumer surplus.
D. Developing countries could be very vulnerable to the harmful effects of globalisation.
E. Globalisation opens up enormous domestic and global opportunities for firms in developing countries.
Choose the correct answer from the options given below:
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