There are two levels of control; one is strategic control and the other is operational control. Strategic control focuses on the course of strategy while operation put more attention on day-to-day operation. However, the control over foreign subsidiaries is not that easy because of distance, diversity, uncontrollable and degree of certainty.
Requirements for Maintain Strategic Control
In order to maintain a better strategic control over the foreign subsidiaries, the three parameters of control (extent, focus and mechanisms) are very important. They are interdependent and the multinational corporations are required to determine these parameters in order to figure out its own suitable policies.
Firstly, the multinational corporations have to select the extent. Extent refers to the degree of control the multinational corporation retain over …show more content…
The corporation divides the globe into different areas or regions to maximize the national interests by minimizing local and cultural differences. Geographic divisions is expected to have a faster and more effective respond to the market change in a particular area. As a result, decision-making control is relatively more important than the bureaucratic control system since the structure requires larger autonomous and flexibility. Only some policies and procedures need to be standardized. Moreover, the significance of local subsidiary culture may outweigh the corporate culture to ensure that local or cultural differences are