Hotel management company set to expand internationally

Trust Hospitality has its sights set on international expansion, according to

Tecton Hospitality has merged with Ocean Blue Hotel Solutions, and the result is Trust. With the merge, Tecton’s CEO Richard Millard has brought on 15-year hotel veteran Patrick Goddard as president and COO.

Trust is strictly a management company, operating branded and independent full-service hotels. Trust is approved operators for Hilton Worldwide, Marriott International, Hyatt Hotels & Resorts, Starwood Hotels & Resorts Worldwide, Wyndham Hotels & Resorts, and InterContinental Hotels Group.

Trust has expressed interest in aggressive international expansion with management deals pending in China, Colombia and Panama.

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How to use

The following video is called How to Find Valuable Stuff on; but it is more than that, as it also covers how to use the information. Below the video, I have included a brief description of some of its sections and the approximate time, in the video, when that particular subject is covered: that way, you don’t have to watch the entire video to find out about a specific issue.

  • At about 4:30, you can watch an outline of the content of the video.
  • At about 10:00, they talk about beginning to export, including a reference to a book (export 101) to read (on- or offline).
  • At about 13:15, you get information about writing an export plan. This includes both an outline and a training video (at about 15:00).
  • At about 17:50, they talk about expanding your export. This section covers such topics are reviewing actual export leads that come in through the US Commercial Service (leads can be sorted by country, region, industry) and the importance of introducing yourself to the Commercial Officer in the foreign location that you are targeting, and to use this as your own “back office.” A couple of examples are shown around 24:00 (China) and 26:15 (France). The latter also shows how to promote yourself through these offices abroad.
  • At about 28:00, you can learn about using Trade Events, how to join a Certified Trade Mission, get a discount on the program if you have less than 500 employees, and be introduced to potential buyers or distributors; or how to join the (less costly) International Buyer Program (around 30:00), to be included in some 50 different tradeshows each year, and have the the Service recruit buyers or other connections for you.
  • At about 31:00, there are instructions on how to use the Market Research Library, including how to use the Country Commercial Guide to find foreign interest in US products. (For actual contact information, you have to call the US Commercial Service in the country to let them verify that you are a US company.)
  • At about 35:00, find out about free trade agreements, and how buyers can save 8-10%, making US products that much cheaper.
  • At about 37:20, there is a discussion of trade statistics, and how to use these to find markets and prices and demand. You are also invited to call for further assistance.
  • At about 39:00, you are introduced to Training and Multimedia to use yourself or for training your own organization.
  • At about 40:00, export as a process is covered, including how to get the product numbers you need to export (HTF number). You can also call 1 800 USA TRADE for help with this.
  • At about 45:00, you can see a list of Export Assistance Centers in the US.
  • At about 46:00, there is a Q&A session. A list of denied parties may be found on (55:00), and how to get help with due diligence is around 56:00, including calling either the specific country help desk here in the US or the foreign office station directly.

Hope that helped you navigate the video. Please comment below and share with others.

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Selling Internationally

If you are selling internationally, there is much useful information in this video. Sure, there’s a lot of Google Adwords selling here, but the analytics and the process are worth noting.

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Use remote (read, international) workers

Remote = International

Check out this interesting article on Matt’s blog:

“He says Remote, I say International”

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International Retailing

International retailing post one will be added shortly and contain an overview of international retailing.

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International Marketing

International marketing covers both in-market advertising and promotion and digital, Internet, and hence, global marketing. Channels of distribution, traditionally considered marketing, is rather covered under international expansion or international corporate development. More later…

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International Licensing

International licensing is a multi-trillion dollar business, and a prime example of international expansion. It includes international franchising, although the latter is covered under a separate category on this site. More to come…

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7 Secrets For Conducting Business Abroad

When conducting business abroad, “Going to Rome, do as the Romans do” still applies. Before physically going abroad, however, consider what may be accomplished through other forms of communication, including on-line chats, webinars, etc. Some of the following advice may apply even to these alternative forms of communication.

1. One secret to conducting business abroad is that a little effort goes a long way. On one of my first visits to Paris, the ticket agent in the Metro gave me a hard time because I was not in full command of the language; but a well-dressed Frenchman behind me in line came to my defense and told the clerk, in no uncertain terms, that he ought to honor my fledgling attempts to speak French. You will be amazed at how a few well-selected phrases pay huge dividends. And the same goes for foods and other customs. Honor them as best you can. Your attitude really makes a huge difference.

2. Taking time ahead of time to learn about the people with whom you will meet is also part of showing respect. That is always true, but magnified exponentially when doing business internationally. Again, it is not necessary to learn everything; but failing to learn what is readily available to you borders on insult, and may actually be interpreted that way. With the Internet at your disposal, you really have no excuse for total ignorance. Look up names, companies, cities, regions, industry, etc. Check with chambers of commerce and your home country and foreign diplomatic and commercial representatives. Call the offices of your hosts and ask for guidance on dress code, meetings and greetings, titles, gift giving, table manners, special habits, etc. Not only will this impress your hosts, but you will be in a much better position to negotiate effectively. Moreover, you may discover resources available to assist you.

3. Depending on the situation, you may want to give yourself the ultimate advantage by enrolling in a “total immersion” course. Short of taking a commercial course, you can approximate the same by spending time with an individual or family steeped in the relevant culture or by visiting the country in a capacity not related to your business.

4. Even so, when you arrive in a foreign country ready for business, don’t think that you know it all: equip yourself with bicultural support. Lots can still be lost in the translation, both literally and figuratively. Depending on your need, consider your own foreign office representatives, local law firms with international connections, outsourcing companies, shared office space providers, translation bureaus, etc. Make sure they understand your goals and objectives before your business meetings.

5. Make yourself accessible while visiting by renting a local communications device (available at most airports) and adapting the preferred local communication methods, be it voice, text, video chat, etc. Use Google translations, as appropriate. Let your local contacts know ahead of time that you are taking these steps to facilitate communication and confirm with them when you are ready. Be sure to include your local address, as well, and the address of any meeting places. (This can also be of help in case you need to ask for directions yourself.)

6. When conducting business abroad, it is fine to show that you want results, but keep in mind that “Rome wasn’t built in one day.” Really getting to know your foreign counterparts is often the main need. It is like creating a new family. The actual business deal becomes almost an after-thought. Moreover, the concept of “closing” a deal may well be foreign in some cultures, in which doing whatever it takes to keep the “relationship” going is more important. For these reasons, think in term of “end games,” common goals and objectives, and be prepared to “share” responsibilities and rewards for achieving them.

7. And finally, recognize that international executives and staff live in a different world. Their perspective is global. There is an “international culture” that transcends all local cultures. And it is not necessarily snobbery: it is the natural outcome of having touch points in many cultures at the same time. With it come shared connections, often in high places, which form a worldwide support network. Communications devices like Skype, social media sites, texting, and chatting are important. International events in various countries are gathering opportunities across nationalities and industry and functional specialties. “Belonging” to this club is highly desirable, if your international ambitions are more than temporary. And your ticket to entry is simply to participate. (Be sure to communicate where your travels take you, both when you are and when your aren’t conducting business abroad.)

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International Staffing 4

International Staffing Research Results

This article is presented in four parts. The first installment covers the arguments over international staffing decisions from a resource-based perspective. The second installment takes on the agency perspective of international staffing decisions. The third deals with the transaction costs perspective of international staffing decisions. In the fourth, and final, installment (this installment), we present research results and discussion of international staffing choices.

Our contribution here is to summarize the arguments, findings, and discussions of a 2002 research paper entitled An Empirical Investigation Of Expatriate Utilization: Resource-Based, Agency, And Transaction Costs Perspectives, professors Danchi Tan, Chengchi University, Taipei, Taiwan, and Joseph T. Mahoney, University of Illinois at Urbana-Champaign.

International staffing is one of the important categories of International Expansion, so please check back frequently for additional articles on this subject.


Although the researchers predicted, from an international staffing resource perspective, that a multinational firm tends to rely more on expatriates in consumer goods industries, this did not follow from the premise first developed by the same researchers. Moreover, they also found that empirical data did not support their suggestion. In trying to explain that, they returned to their earlier premise that, in consumer goods industries, local knowledge and local business connections are crucial for the success of multinational firms and hence the opportunities for organizational learning are great. Japanese multinational firms may have sent expatriates to the US subsidiaries in order to develop their managers. It is hard to see how they could have expected their data to prove otherwise.

They correctly predicted, from an agency perspective, that industry globalization would lead to higher expatriate utilization. An analysis of the data confirmed their prediction and suggested that when the level of international linkage of a US industry is high, Japanese multinational firms tended to send more expatriates to their US subsidiaries, and that when the level of integration of value added activities of a US industry is high, Japanese firms tended to appoint a Japanese top manager (also an expatriate) to the US operations.

Next, the researchers predicted, from a transaction cost perspective, that a firm’s utilization of expatriates is likely to be influenced, both positively and negatively, by the level of uncertainty about the target market. They found that Japanese firms sent more expatriates to US subsidiaries in highly uncertain industries, but tended not to appoint a Japanese national as the top manager to the US subsidiary in highly uncertain industries. Perhaps such findings are due to the need for both expatriates and local managers in the presence of high uncertainty.

They also predicted, from a transaction cost perspective, that a Japanese firm with greater multi-nationality is likely to rely more on expatriates. The empirical findings are consistent with the argument that a firm with higher multi-nationality is likely to be endowed with greater international managerial resources, which allows the firm to employ expatriates to manage its foreign operations.

Further, from a transaction cost perspective, they predicted a positive association between the tacitness of knowledge of an industry, and expatriate utilization, but the data did not support this. One possible reason is that the measure for tacitness captures the extent of tacitness of both product and process innovations in US industries. It is likely that the product knowledge is location-specific (for example, product innovations developed in the US subsidiary are based on the preference of US consumers), and hence is transferred to a lesser extent than process knowledge. If this is true, the association between tacitness and expatriate utilization is likely to be valid only when process, rather than product, knowledge is considered. To test such a conjecture, they replaced the measure for tacitness with alternative measures relating to process and product, and re-run the model. Then, the empirical results are partially consistent with initial conjecture, as the process measure correlates with more expatriates while product does not. This empirical finding suggests that when the process knowledge is tacit, a firm is likely to utilize more expatriates to facilitate knowledge sharing and learning. They also performed the same analyses for top managers and found that neither process nor product by itself correlated with Japanese top managers. Perhaps it takes a group of managers, rather than one top manager, to facilitate tacit knowledge sharing within a multinational firm?

Finally, from a transaction cost perspective, they predicted that a firm transferring proprietary resources such as R&D or reputation (e.g., through extensive advertising) is likely to utilize more expatriates in foreign subsidiaries. Findings suggested that Japanese firms with high R&D intensity have sent more expatriates to their US affiliates. At the same time, the likelihood of using Japanese nationals as the top managers of the affiliates was not higher for these firms. It may be possible that protecting proprietary technologies requires a group of trusted managers. There is also some indication that the importance of a firm’s reputation and brand names correlate with the use of more expatriates, but when reputation is location-specific, it is not easily transferred across national borders, and hence, does not require expatriate involvement. In addition, promoting reputation and brand names in foreign countries may need to be coupled with local knowledge and distribution, and thus local managers can make valuable contributions.

Irrespective of perspective, the researchers also studied the impact of foreign market entry methods, time of arrival, and size of subsidiary. They found that Japanese firms that entered into the US industries by acquisition may have relied less on expatriates to avoid potential employee resistance from acquired companies. Similarly, they found that utilization of expatriates is greater in older Japanese subsidiaries. It may be possible that early Japanese investors in the US had poor information about the US managerial labor market and thus had relied more on expatriates to manage their international operations. Another potential reason is that early Japanese investors had greater tendency to rely mostly on expatriates in every situation. Finally, they surmised, from the data, that for larger US subsidiaries, Japanese firms sent more expatriates, but tended to appoint non-Japanese nationals as the top managers.

The researchers conclude, on a practical note, that empirical analyses indicate that managerial contractual incompleteness problems may influence a firm’s international staffing decisions. In conditions where the contractual problems are likely to prevail, such as in global industries, in highly uncertain industries, in industries characterized by tacit process knowledge, transferring proprietary technologies, Japanese multinationals are found to have sent more expatriates to their US subsidiaries. They also found that the need for local resources affect the staffing decision; as in highly uncertain US industries where local resources are important for buffering risks, Japanese multinationals are found to have assigned non-Japanese nationals as the top managers.

Further, they indicate that due to the cost of contracting with local managers, a multinational firm may over-rely on expatriates even when expatriates may fall short of expectations. Accordingly, reducing contractual costs of utilizing local hires may improve efficiency in human resource utilization. The detailed discussion of the sources of contractual concerns over international employment contracts pointed out earlier in this set of articles could serve as a starting platform for exploring how to develop mechanisms to reduce contractual concerns.

And finally, they note that human resources are one of the more important strategic resources of a multinational firm, too important to be limited to human resource management scholars, and that international staffing deserves more attention from a wider audience, particularly from international strategy researchers.


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International Staffing 3

International Staffing Transaction Costs

Our contribution here is to summarize the arguments, findings, and discussions of a 2002 research paper entitled An Empirical Investigation Of Expatriate Utilization: Resource-Based, Agency, And Transaction Costs Perspectives, professors Danchi Tan, Chengchi University, Taipei, Taiwan, and Joseph T. Mahoney, University of Illinois at Urbana-Champaign.

This article is presented in four parts. The first installment covers the arguments over international staffing decisions from a resource-based perspective. The second installment takes on the agency perspective of international staffing decisions. The third (this installment) deals with the transaction costs perspective of international staffing decisions. In the fourth, and final, installment, we present research results and discussion of international staffing choices.

International staffing is one of the important categories of International Expansion, so please check back frequently for additional articles on this subject.

Transaction Costs Perspective of International Staffing Decisions

We next investigate the relative contractual costs associated with expatriates and local hires from the perspective of transaction costs of international staffing. Transaction costs refer to the relative efficiency of governance choices in organizing economic activities. Expatriates and local hires are two governance choices for providing managerial services in foreign operations. Making managerial employment contracts with either governance may potentially give rise to ex ante and ex post contractual costs. Both costs may increase the multinational firms’ concern about its limited organizational control over managers.

One source of ex ante costs of managerial employment contracting arises from the difficulty in specifying exhaustive criteria for recruiting the right managers for foreign operations. Such a difficulty is expected to predominate when the market in which the multinational firm chooses to enter is subject to high uncertainty, because uncertainty makes it difficult for the multinational firm to anticipate the required abilities, and thus the qualifications, that the managers of the foreign operation should be equipped with. Therefore, managers may have to adapt to tasks (e.g., restructuring) that they were not informed of prior to their assignments.

Thus, when a high level of uncertainty characterizes the market, the multinational firm may prefer to select managers who are expected to be more loyal and who are willing/able to adapt to various contingencies.

However, such individual characteristics are imperfectly observable and can only be fully known through experience over time. Since the firm is likely to have greater knowledge about the imperfectly observable characteristics of its internal managers than local hires, the use of expatriates may reduce the ex ante incomplete contracting problem arising from uncertainty in the target market. Such a reduction in uncertainty may help reduce the multinational firm’s control concern over its managers of foreign operations. On the other hand, local hires may potentially create greater values than expatriates for the foreign subsidiaries because they have greater local knowledge and local business connections that allow the multinational firm to adapt to contingencies and to buffer risks.

Another source of ex ante costs of managerial employment contracting arises from a smaller-numbers bargaining condition, which occurs when qualified managerial candidates are scarce. Such a contractual problem may occur in both the local managerial labor market (i.e., the market for local hires) and the firm’s internal managerial labor market (i.e., the market for expatriates). The greater the contractual problems the firm potentially faces in a managerial labor market, the less likely that the firm will rely on the market for searching managers to serve the foreign operation. For example, a firm with few internal managers qualified for international management is likely to rely more on local hires than on expatriates to serve its foreign subsidiaries.

A firm with a great multinational diversity is likely to be less subject to such a small numbers bargaining problem in its internal managerial labor market. Specifically, a firm that operates in a variety of countries can provide diverse learning opportunities for its managers. Consequently the managers can develop multi-lingual abilities and local adaptation capacities, and they can become qualified as managers of foreign subsidiaries.

The small-numbers bargaining problem can also occur in the market for local hires, even in countries where local talents are abundant. Specifically, a multinational firm may require managers of its foreign operations to be equipped with firm-specific knowledge and firm-specific relationships. Since firm-specific abilities and firm-specific relationships can only be developed within the firm through learning by doing and intra-firm interactions, when the degree of firm-specificity in the required managerial capabilities is high, the multinational firm is likely to have difficulties in finding qualified local hires and may have to rely on expatriates to provide managerial services.

Transferring tacit knowledge within the multinational firm requires managers of foreign operations to be equipped with a high extent of firm-specific capabilities. First, because tacit knowledge is not currently or easily codifiable, its transfer requires the transferors to demonstrate their knowledge on the job and to give comments on the errors made by the transferees in the process of imitating the transferors. Therefore, transfer of tacit knowledge requires a high level of interaction within the multinational firm. To facilitate such interaction, the units within the multinational firm may have to share similar languages and understanding, and to build informal social links with other units. Such intra-firm relationships are firm-specific capabilities that need to be developed through experiences within the multinational firm.

In addition to ex ante contractual problems such as uncertainty and a small-numbers condition, a multinational firm facing international staffing decisions may also consider an ex post contractual problem when managers attempt to renegotiate the terms of the employment contracts (such as compensation and position) in their favor. If managers have greater bargaining power vis-a-vis the firm, the firm may be forced to accept worsening terms of the employment contracts.

One condition in which managers may have greater bargaining power is that the firm has made substantial irreversible investments specific to managers by the time the managers renegotiate the contracts, because the firm cannot recover such investments once the managers leave the firm.

For example, a firm may provide considerable training to its managers. If the training (such as technical skills and language training, outside social network introduction) can be valuable to other firms, the managers may threaten to leave the firm and to serve its competitors. In this case, the firm’s risk of having lower bargaining power than managers is likely to be substantial.

However, the firm is not the only party who may incur loss if the employment contract is terminated; managers may also incur an economic loss. For managers, their firm-specific knowledge and firm-specific relationships that have accumulated through experience with the firm are irreversible investments that they commit to the firm. If they leave for other firms, such knowledge and relationships would lose at least a part, if not all, of their economic value.

Firm-specific knowledge and relationships that managers have developed within the firm therefore increases the switching costs of managers and reduce the firm’s risk of having lower bargaining power than managers. The bargaining problems from renegotiating managerial employment contracts may occur for both expatriates and local hires.

However, the economic contractual hazards of using expatriates are likely to be smaller than those of using local hires. Specifically, expatriates have typically spent more time with the multinational firm. Their skills, knowledge, and relationships are tailored to the firm to a greater extent than local managers, and thus they have more to lose than local hires once their employment relationship with the firm is terminated. Similarly, the firm has made more irreversible investments in expatriates than it does in local hires. Hence the mutual economic interests for maintaining a long-term relationship are stronger between the multinational firm and expatriates than between the firm and local hires. The multinational firm may mitigate potential bargaining problems by using more expatriates for its international staffing needs.

Expatriates’ investments in building firm-specific capabilities can be seen as credible commitments in supporting their cooperative relationships with the multinational firm, reducing the need of the firm for monitoring them (and hence the economic costs of enforcing employment contracts). The need for monitoring managers should be greater the more important it is for the firm to protect its core competencies, such as technology and reputation, from leakage or erosion. The use of expatriates may alleviate the multinational firm’s concern that the managers may take the technology and leave for other firms, or to free-ride on the firm’s reputation. A firm’s technologies and reputation are often characterized by its R&D and advertising intensities.

Research has shown that many expatriates leave their firms within a few years after their return to the parent firm. The researchers believe that typically both multinational firms and expatriates consider the turnover a loss of their investments in the mutual relationship. The cost of losing a repatriated employee has been estimated to be $1.2 million. Multinational firms should provide better economic incentives (e.g., better repatriation plans) to retain their expatriates and hence retain their investments in these expatriates.

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