Hub 9 pt3 Decision making/organizational structures

Question 1

what determines the level of control

Answer 1

where decisions are made

Question 2

what are subsidiaries(part of FDI;Wholly owned subsidiary)

Answer 2

Companies controlled by other companies (known as parent companies) through ownership of enough voting stock to elect a majority of the voting members on the company’s board of directors

Question 3

affiliates (part of FDI;Wholly owned subsidiary)

Answer 3

Companies controlled by other companies , but less - than majority
owners may
exercise control by a variety of means, both those involving
stock ownership and
those involving non-
ownership mechanism s

Question 4

in the example of standardization of companys products;
what do subsidiaries do for profit reasons?
what would the parent company prefer to standardized?

Answer 4

1. subsidiaries may favor product and equipment designed specially for the market and conditions of the
   host country.
   2.may prefer product and equipment be
   standardized in order to multiply
   source options and simplify
   procurement and maintenance .

Question 5

in ex where headquarters’ willingness to benefit the enterprise at subsidiary’s expense;
1.what might HQ do? and why
2.how does HQ decide on which subsidiary get an order of goods
3. what does HQ do if a market is too small for economies of scale, what does HQ do overall?

Answer 5

1.HQ may move production factors from one country to another to gain financial or competitive advantage; subsidiary management is not thrilled with loss of control.
2.When deciding which subsidiary gets an order for goods, HQ decides on a number of factors including cost, operational issues, financial factors, and governmental pressure
3.if one market is too small for economies of scale, HQ may have specific countries make a single component(s) that all other markets can use; this demands greater HQ coordination and control

Question 6

what does HQ decide to the subsidiary that contribute most to the International company?

Answer 6

HQ decides price and profit allocation to that subsidiary and they will get to book the profit

Question 7

whats transfer pricing

Answer 7

Pricing established for transactions
between members of the same
enterprise.

Question 8

concept of control in strategic alliances/joint ventures
1. control is not as easy as it is with
2.what might other shareholders/joint venture partner do in regard to decision

Answer 8

1. a 100% owned subsidiary
   2.they may make it difficult or impossible for the parent or other partner to make the sort of decisions mentioned above