Explain the different types of subsidiary-level strategy, and discuss some of the pitfalls associated with each type.
Subsidiaries may enjoy an independence of being autonomous or act passively under the directions of the headquarters. Based on this level of independence, these strategies are divided into two sub categories, first is the support and implementation category and second is high level of autonomy. Both are explained in the following.
Support and implementation
In this kind of organizational setup, the headquarters level strategies have a larger role to play in the day to day activities of the subsidiaries. The strategic decisions are made the corporate level. The subsidiaries play a passive role in the making of these strategies. The subsidiaries act as support and implementation agents. According to Vereecke & Van Dierdonck (2002), the subsidiaries are mostly implementing the decisions made at corporate levels and hence there is little strategic decision making at this level.
In my opinion, limiting the role of the subsidiaries to just supporters and implementers may not be a wise decision to make. The headquarters may not be fully aware of the local market and norms of the society that they want to compete. The subsidiaries may be more competent to assess the ground realities and make spot on strategic decisions.
High level of autonomy
As the name suggests, the subsidiary may enjoy a high level of autonomy in developing and implementing strategic strategies. The subsidiaries are near to the actual consumer market. They know the needs of the local market and can assess different marketing strategies to reach out to them. These strategies may prove fruitful when dealing with the local market decisions. Having said that, there could also be some disadvantages of these kinds of strategies. High level of autonomy from the headquarters may mean a loss of control of the headquarters. The profits target set by the headquarters may also be overlooked by the subsidiaries as they would make decision based on ground realities looking at the purchasing power of the local market.