This multifaceted, decision‐oriented case requires you to address several issues in performance evaluation in an international context. In the process of reviewing the annual performance of its foreign subsidiaries, Falcon's CEO raises concerns about the performance evaluation metric and the effect of exchange rate changes on the competitive positions of foreign subsidiary managers in Denmark and Japan. The case requires you to assess the strengths and weaknesses of Falcon's performance evaluation system, examine the appropriateness of country managers' responses to exchange rate changes, understand the difference between evaluation of business units and their respective managers, and recommend improvements in the performance evaluation system.

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