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Their objective was to stimulate intra-firm competition among subsidiaries
However...
Rather than competing they stood together
A senior manager was closely tied to top management in MATAV.
This contact was therefore invaluable and couldn't be replaced.
Telefongyár possessed RDpower and could therefore:
started a strike. It led to a production halt in three other factories in Germany, the UK, and Belgium
Slow down the downsizing of the subsidiaries workforce
Gain Siemens most modern & advanced technologies
Siemens HQ ties were established with MATAV
Therefore the strike only lasted 1 week!
The resource dependency vanished
In the end:
The employees of the affected subsidiary secured good termination packages for those laid off.
RESOURCE DEPENDENCY POWER
It is the power to disturb the proper functioning of the value chain by halting production
What do we know about resources?
Subsidiaries always have systemic power if they are responsible for a specific function of the intra-firm division of labour
Resources are a basis of power
Organizations depend on resources that are often in the hand of their subsidiaries
Power & resources are linked
QUICKTIME EXAMPLE
Burger joint business cannot function without bread!
Subsidiary's power
HQ dependance
=
So business will adopt countervailing strategies
HQ
Subsidiary's resources
& so...
will associate with more bread suppliers
riding itself of the risk of...
Resource dependency power
TRUE or FALSE
Common assumption:
HQ always has tight control over subsidiaries
INSTITUTIONAL POWER
Increased economic freedom
Dominance of global capital
Improved communication and transportation means
Increase in cross border mobility of MNCs
Persistent openness of national governments to FDI
Increasing shareholder involvement
Increased influence of MNCs HQ in policy making
Decreasing power of national governments
and local actors
In reality
The initial roles assigned by the HQ are soon forgotten.
4 TYPES OF POWER
MICRO POLITICAL BARGAINING POWER
Systemic
Institutional
Resource dependency
Micro Political Bargaining
MPBP plays a role when other sources of power are used
Relies on the institutional structures of the host country
Does not require strong embeddedness in the economy/society of the country.
Different strategies to use Institutional power:
The three other types of power need to be enacted in a politically sensitive way with the help of MPBP
Subsidiaries need to investigate the extent to which they can use the power resources they possesses without the risk of headquarters’ retaliation.
The use of power can be communicated in different ways. E.g. Politically sensitive information
Resource-dependency and Systemic power are subject to erosion over time. Not sustainable.
Bargaining power is the relative ability of parties in a situation to exert influence over each other.
Introduction of company-wide HRM practices in the German subsidiary of GB-Pharma
GB-Pharma generally follows a local approach to HR management.
Constant reminder of German labour law to the HQ and that the introduction of those standards would lead to legal problems.
Usually the warnings were respected
by the HQ.
- How crucial the object of the bargain is
- The strength of HQ's bargaining skills
Pakistan's DHL subsidiary was unable to
respond promptly to software adaptation problems
However...
Depends on subsidiary manager’s personality:
If feared of being penalized if it used institutional power, it will not work.
Entire DHL operations became very inefficient and relied heavily on DHL Pakistan
DHL Pakistan reputation and importance diminished as:
Most subsidiaries went back to their previous software packages
Strong
Power
Strong
Weak
Sustainability
Thanks for listening!
Any questions?
Comments?
Marie LIETARD-MONTIGNY
Joseph ASH SAKULA
Eid ALBORDAINI
Systemic
Resource dependency
Institutional
Micro political barganing