Question

In choosing whether decisions will be made by the parent company or by its subsidiaries, what should management consider when equipment and products are standardized worldwide? What about when they are tailored to individual national circumstances and markets?

Answer 1

The decision making power should always remain with the parent company, and not with subsidiaries because uniform level of quality and standard form of the products is a distinguished feature of the company and its products and should not be altered with as it is a hallmark of brand and directly relates to its brand value. If subsidiaries are allowed to make changes, there will be varying forms of product specifications, which will be difficult to manage for the company, particularly during after sales support. If the products need to be different to meet the specific need of a market, the subsidiaries must be allowed to register their concerns and their input should be sought to make certain changes that address to majority of global demands and concerns. These changes would be managed more easily and effectively, while not altering the global uniformity of the products, and at the same time, making he products suitable to meet the regional demands. For example, the basic character of the product can be kept same, with a room for customisation up to some extent to meet the local needs. It will make the product more versatile, while remaining easier to manage.