The impact of internationalization strategy on management control system

Type :

Presentation

Pages :

16 pages

Format :

.doc

Published date :

01/21/2009

Category :

Business & market

Sub category :

Management

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Summary :

Overview.
Introduction.
Literature review.
1. The Internationalization strategy affects the formality of the management control system of a company.
2. The MCS of a multinational corporation is often imposed to the subsidiaries in order to facilitate the control.
3. Control problems increase when firms develop an internationalisation strategy due to cultural differences.
Research question.
Research methodology.
1. Choice of subject company and interviews.
2. The interview guide.
Main results.
The internationalization strategy affecting the formality of the management control system of a company.
Conclusions and limitations of the study.

Abstract

In an increasingly global economy, corporations need to develop more and more efficiency and reliable management control system (MCS) in their home countries, but also in their subsidiaries abroad. This study analyzes the effects of an internationalization strategy on the management control system of a company. In a more precise way, we will focus on three points: the requirements for a multinational company to sustain formality, centralization of MCS, and finally, the impact of cultural differences on MCS. To answer our problematic, we decided to develop an intended study (how a particular strategy affects MCS) through a single case study based on La Redoute. As we used a qualitative study for our research, we collected information through semi-structured interviews, from two persons working at La Redoute's headquarters in Roubaix. These interview data indicated that formality is required by international companies. In those firms, managers spend a lot of time on reporting, and informal tools are usually neglected due to a lack of time and means. A right balance between local/global, centralization/decentralization of MCS is usually lauded, nevertheless this balance is not really implemented in reality. Firms usually desire to leave a certain autonomy to subsidiaries ("think global, act local") but this independence is not really given as for MCS. Financial, accountant and reporting tools are usually imposed to foreign entities to facilitate transactions and communication. Moreover, cultural differences are usually denied and avoided by enterprises.