Executive Summary
The recent quest for businesses to go global and establish their presence internationally has been attributed to globalization. Various organizations have become multinational corporations in a bid to participate in the global playing field. These multinational corporations have a common goal which is to have a competitive advantage over their rivals, especially those who operate in the same sector or industry. A successful establishment of an MNC’s presence overseas is directly dependent on an effective transfer of organizational culture from headquarters to subsidiary companies. It is also determined by the level of alignment between activities and goals of headquarters with those of the subsidiary company. This project evaluated control strategies, how these strategies influence the transfer of practices between home country and host country, the role exogenous and endogenous factors play in influencing the type of control method MNCs adopted by MNCs and transfer of knowledge in MNCs.
This project has analyzed the automotive industry of China (the host country) in contrast to that of the United States of America (USA, the home country) and emphasized on the need to focus on achieving the best by selecting a control method that would be effective, appropriate and acceptable in the host country. As stated by the project, this is necessary due to the fact that, cultural and institutional variations amongst countries indicate that legislation and practices take different forms in different countries; this may either obstruct or facilitate control, integration and the transfer of knowledge/practice. Furthermore, in a bid to ensure the use of appropriate control method, this project has analyzed the cultural and institutional factors that are predominant in the subsidiary country in contrast to those of the home country, taking into cognizance the role of the Chinese government and labor unions in shaping the activities of businesses.
From findings and discussions, this project concluded that China entirely different from USA especially when looked at from a cultural and institutional perspective. Hence, American MNCs seeking to enter the Chinese market are faced with a “herculean task” of adapting to the institutions, business systems, cultural practices, norms and values in China. Finally, this project made some recommendations for the achievement of successful integration and transfer from USA to China.
Table of Contents
1ACKNOWLEDGEMENTii
2Executive Summaryiii
4List of Abbreviationsvi
5LIST OF FIGURES0
6BACKGROUND OF STUDY1
6.1AIM AND OBJECTIVES3
6.2SIGNIFICANCE OF STUDY3
6.3STRUCTURE OF THE PROJECT4
7LITERATURE REVIEW5
7.0 INTRODUCTION5
7.1 THEORETICAL FRAMEWORKS5
7.1.1Institutional Theory5
7.1.2Resource Dependence Theory (RDT)6
7.1.3Transaction Cost Theory (TC)6
7.1.4Agency Theory7
7.1.5Resource- Based view Theory (RBT)8
7.1.6Cultural Theory- Hofstede’s Cultural Dimension8
7.1.7Edward .T. Hall’s cultural Theory9
7.2CONCEPTUAL FRAMEWORKS10
7.2.1International Management (IM)10
7.2.2Convergence versus Divergence11
7.2.3Strategies Adopted By MNCs12
7.2.4Knowledge Transfer in MNCs15
7.2.5Factors Influencing Transfer of HR Practices in MNCs19
7.3Difference between Control, Coordination and Integration20
7.3.1Types of Control.21
7.4Factors influencing control from MNC perspective23
7.4.1Exogenous factors influencing control on MNC level24
7.4.2Endogenous factors influencing control on MNC level26
7.4.3Factors influencing control from subsidiary perspective27
8: Analysis and Discussion.29
8.1Introduction29
8.2Case study scenario29
8.3Findings and Discussion30
8.3.1Automotive Industry of the USA in contrast to China30
8.3.2Factors influencing control and transfer of practices between from parent company in America to Chinese subsidiary.34
9: Conclusion and Recommendation44
9.1Conclusion44
9.2Recommendation45
9.2.1ACTION PLAN49
10References51
10.1Journals51
10.2Books59
10.3Websites61