The purpose of this project is to discuss and analyse the factors that result in different subsidiaries of Transnational Corporations (TNCs) playing out different roles within the organisation. This will be done by testing the completeness of the Bartlett and Ghoshal (1986) typology as it is perhaps the most well-known and prescriptive of all the typologies within this field. It will be shown, using the automobile industry with in-depth analysis of Toyota - the Japanese automobile manufacture - that Bartlett and Ghoshal's typology, although very important in determining the roles that subsidiaries take on, is incomplete. It will be shown that it fails to take other factors into account when prescribing the subsidiary roles within the organization. We therefore advise our client to consider other factors when deciding on the degree of autonomy to grant to its subsidiaries.
For the purpose of this report, the term "subsidiary" will be taken as "any operational unit controlled by the Multinational Corporation [in our case, TNC] and situated outside the home country" (Birkinshaw, 1997). The term "role" is taken to be the discrete activity or activities that the subsidiary engages in. The term TNC will be discussed at length within the main body of the report.
MSM Consulting's client is a leading Japanese global manufacturer of motor vehicles. In the past year the client has been concerned that their internal organisational structure is suboptimal to the decison-making process. The client is unaware of how much autonomy to grant to their subsidiaries to suit the needs of their organisation. They have enlisted MSM Consulting to advise them on how best to determine this degree of autonomy that they should grant to their subsidiaries. MSM Consulting will use a both research of literature and research on a close competitor to advise the client.
In order to analyse this problem, we will investigate the literature on subsidiary roles within organisations, as the role a subsidiary takes on and the amount of autonomy a parent company gives to its subsidiary are one and the same questions.