Tap your subsidiaries for global reach

Question 1

What are the crucial elements of subsidiary management? (5)

Answer 1

1. Local knowledge about market and product
2. Commitment of managers’ closest to the market
3. Need for reciprocal cooperation reflected in relationships
4. Independent and decentralized decision making
5. Flexibility

Question 2

describe subsidiary role: strategic leader

Answer 2

high competence of local org, high strategic importance of environment

• Subsidiary is the partner of HQ.
• Detects signals, analyzes them, and develop responses.

Question 3

describe subsidiary role: Contributor

Answer 3

high competence, low strat importance of environment

• Subsidiary has superior technological capability.
• Too strong and capable for an unimportant market.
• Channel the capabilities towards projects of corporate importance.

Question 4

describe subsidiary role : implementer

Answer 4

low competence, low strat importance of local environment

• Subsidiary has enough competence to maintain its local operations.
• Play delivery role – deliverers of value added products.
• Efficiency is key here, not creativity.
• Leverage scale economies.

Question 5

describe subsidiary role: the black hole

Answer 5

low competence, high strat importance

• Subsidiary cannot make a dent in a strategic market.
• Manage your way out of it.
• Setup a small presence only.
• Goal is to learn and sense the signals.
• Monitor trends in Japan
• Monitor competitors’ behaviors
• Provide feedback to HQ (Window concept)
• Keep the thinking going
• Eventually you can find a way (a limited product line) to climb out of the hole.