Question

book- richard L daft organization theroy and design 12e

chapter 6 case analysis- the Rhode industries

Would the subsidiaries still be competitive and adaptive in local markets if forced to coordinate with other subsidiaries around the world? Why?

Answer 1

There is both an opportunity and a downside as Rhodes Industries seeks to impose cooperation among all the subsidiaries. Firstly, they would be as competitive as current market share and knowledge of consumers would benefit them. Further communication also helps them to communicate better throughout the group, while allowing the divisions to discuss and monitor any market changes, technical innovations or more effective strategies, creativity, new product concepts and growth and other business information.

In fact, it would improve the company's profitability and chances of having economies of scale in the long run, thus reducing costs and increasing income for more acquisitions. It would also be easier for the company to share its goals and work towards it as a whole, with coordination.

However, each subsidiary may not be able to adapt to internal as well as external changes as quickly as if it were working independently. This is caused by the slower channels of communication, differences caused by different views (people working in different positions may have different ways of doing the same job that may not match any subsidiary) or language gap and cultural clashes that may arise in a more coordinated manner that result in a company's detriment as it may lack incentives for profit. Furthermore, if the subsidiaries work individually, they could focus more on rapid changes without having to worry about their involvement with other subsidiaries.

Therefore, if the companies should work together around the globe, they would be more competitive as they are already funded by the current market share, better communication and improved overall goals. Nevertheless, adaptation would be easier as more collaboration produces additional contact channels and cultural or language differences.

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