1. Organizing for Effectiveness HQ-Subsidiary Relationships
Nathan Washburn Associate Professor Jon M. Huntsman School of Business Utah State University

2. International Strategy Assignment
Teams represent the geographic locations of two different MNCs. Teams A, C, & E are Company 1. Teams B, D, & F are 2. The assignment for each company is to design and fabricate a product for their top customer:
Use every part given and only the parts given
Product must be a closed loop (don’t want any leaks)
Product must be exactly the same regardless of the location it was made (copy exactly)
Each company is following a different strategy:
Company 1: One location designs and then communicates to the other locations.
Company 2: All THREE locations simultaneously work to find a design
All coordination across subsidiaries must be done by phone (no pictures)
You have 50 minutes to complete this task and check back into the classroom with your products.

3. Exercise debrief
What are the benefits and costs of centralized management?
What are the benefits and costs of localization?

4. Different strategies have inherent tradeoffs
Responding to local needs suggests that you cannot sell the same product globally (Philips, Nokia)
Selling the same product globally suggests a lack of local responsiveness (Matsushita, Apple)
High
Global Strategy
Trans-national Strategy
Need for Global Integration
Multi-domestic Strategy
Low
High
Need for Local Responsiveness

5. Think global act local
Create worldwide perspective (think global): centralize resources and responsibilities
Create national competence (act local): decentralize resources and responsibilities
Become transnational (think global and act local): create interdependence of resources and responsibilities across business units
Shared decision making (resources, strategic options, responsibilities)
Transfers across function, divisions, regions

6. Finding meaningful roles for national subsidiaries
Strategic importance of local environment
High
Low
Competence of local organization
High
Strategic Leader
Contributor
Implementer
Black Hole
Low