Effectiveness of Strategy at Subsidiary Level Essay

Effectiveness of Strategy at Subsidiary Level - Essay Example It is the method of aligning all the activities being undertaken in the organisation such as management, marketing, research and development and Computer information system in a prescribed way to achieve the goals of the organisation. The first step namely the strategy formulation involves the development of the business mission, evaluation of the opportunities and threats faced by the business organisation in the business, by using tools such as SWOT analysis, examining the strengths and weaknesses of the business, determining the long term objectives of the business and designing the new strategies to eke in the process of achieving the new targets. It also include the processes to determine the investment direction, the business markets to be addressed, extension of the operations of the business, limitations faced by the business in order to undertake the business activities. Strategy formulation also helps the business in deciding about the matters to be addressed on priority basis. There is not any organisation in the world which has unlimited resources. Therefore the business organisations need to evaluate which projects are important and need investment. The future of a business organisation is very much effected by the strategic decision of the management of the organisation. With the globalisation of the economy the concept of Multinational Enterprises is prevailing all over the world. An MNE is a differentiated network of internationally dispersed units, which are simultaneously embedded in two business contexts: the internal MNE and the external (host country) environment. Thus, the roles and/or strategies of subsidiaries are both shaped by and affecting these two contexts. A subsidiary has a dual role to play: it interacts with the rest of the MNE internally and with local partners externally. Firstly, while subsidiaries can benefit from knowledge flows from the rest of the MNE, they can also do so from the local partners in the host country, to enhance their level of competence and hence contribute to the overall competitive advantage of the MNE. Secondly, subsidiaries may also help or hurt their local partners during their external interactions in the host country business environment. It has been argued that the state of the economy of the host country has significant implications for the operation of the subsidiaries, and consequently for its strategy (Hunt and Morgan, 1995). Because of this the main macroeconomic concepts relating to the determination of economic activity, and related issues such as the inflation rate and the exchange rate, have been discussed in some detail. The various factors affecting the company should