INTERNATIONAL BUSINESS

International Business



Table of Contents

Introduction3

Discussion4

Types of MNE Subsidiaries8

Truncated miniature models9

Rationalized Associates9

Single-activity Associates10

Conclusion12

International Business

Introduction

The international expansion of business activity for many companies a key pillar of its growth strategy, globalization trends, such as the progressive removal of trade barriers, the growing information technology network and the ongoing standardization of consumer behavior have resulted in that company of many industries today in several geographic markets compete in the world. For many companies, is currently less whether they expand internationally, but the form in which they conduct their activities worldwide. The MNE has usually also been considered as having a separate “home country” where its head office are situated and which operates as the control center, given that major strategic direction for its associates in different “host countries,” in addition to provide the major or key resources on which the associates run their activities (Birkinshaw, 2006, p467).

Certainly, the home country firm is referring to as the “parent firm,” means that the home country is a chain of command of associates or subsidiaries. In addition, people of the home country are supposed to own (and then run) the international activities of the MNE. While majority of the MNEs are currently structured along with these line of activities, there are large number of companies in which power and rights of ownership are increased over many countries, plus many other cases where MNE can place their head office in a host country other than home country (Narula, 2000, p141). Moreover, many MNEs have many head offices situated in different countries, with strategic power spread along with geographic, manufactured products, or operational services.

Discussion

The organizational structure of management by multinational enterprises is directly related to their intrinsic characteristics. Despite an extensive network of overseas branches, representative offices, subsidiary companies, and multinational enterprises have a home country or country of legal registration of official headquarters (Birkinshaw, 2006, p467). Top management of the company is empowered to monitor the entire "pyramid" of the company, including its overseas offices. This makes the control system of rigidly centralized.

With increased decentralization in the management of the national companies and multinationals are trying to introduce new management techniques, delegating part of the former top-level functions to their foreign offices, particularly in the areas of operational management. In decentralized multinational enterprises have become major economically link in the so-called profit centers or stand-alone unit, the leading independent accounting ratio of costs incurred and revenues from sales of products, goods and services of their departments (Birkinshaw, 2008, p773). In some cases, the division is the management structure of the strategic economic centers, in which (in addition to the above control functions) is also carried out strategic planning for the development of this subdivision, taking into account the analysis of market dynamics, competitive products, market research, etc.

Decentralization of management caused the reduction of economic and financial control by senior management that increased maneuverability of foreign subsidiaries in the decision-making. Despite this, the centralization of management, which has existed for many years, has led ...