Question

Identify the true statements about an expatriate's base salary in the context of international management. (Check all that apply.)

a. It is the standard against which benefits and bonuses are calculated.
b. It is typically set in accordance with the base pay of the home country.
c. It is usually paid in local currency, home currency, or a combination of both.

Answer 1

An expatriate's base salary is the benchmark for calculating benefits and bonuses, typically mirrors the home country's pay scale, and can be paid in the local currency, home currency, or both. MNCs dealing in different currencies must balance currency exchange factors in expatriate compensation.

Step-by-step explanation:

When determining the base salary for an expatriate in international management, there are a few true statements:

• It is the standard against which benefits and bonuses are calculated.
• It is typically set in accordance with the base pay of the home country.
• It is usually paid in local currency, home currency, or a combination of both.

Multinational corporations (MNCs) operate across various countries and deal with multiple currencies. A Chinese firm, for example, may receive revenue in U.S. dollars from sales abroad, but it needs to pay for expenses such as wages, supplies, and investments in the local currency, which is the Chinese yuan.

Therefore, a balance in currency exchange is integral to international business operations, and this directly impacts how expatriates are compensated.