The Foreign Subsidiary

Working Within an International Firm

by Yezdi H. Godiwalla (Author)
©2020 Monographs XIV, 432 Pages


This book explores international management with a focus on the foreign subsidiary. The foreign subsidiary is an important entity within a multinational corporation (MNC). Much of the future revenue and profit growth of the MNC will be from its foreign operations. Together with other foreign subsidiaries, the foreign subsidiary represents the future growth and survival of an MNC. This book investigates the theme that the future holds the MNC and the foreign subsidiary true to their purpose of enlarging the scope of business around the world and transferring from across countries: people, values, ideas and views and perspectives, knowledge, arts and know-how and skills, life styles and standards of living, goods and services, equipment, finance, and (engineering and organizational) technologies.

Table Of Contents

  • Cover
  • Title
  • Copyright
  • Dedication
  • About the author
  • About the book
  • This eBook can be cited
  • Table of Contents
  • Figures
  • Tables
  • Foreword
  • Introduction
  • Part A: Global Organizational and Foreign Subsidiary Strategies
  • Chapter One: MNC’s Strategy Paths
  • Chapter Two: Strategic Management for MNC Firms
  • Chapter Three: Foreign Subsidiary Unit Strategic Decision-Making Process
  • Part B: HQ-Foreign Subsidiary Relationship:
  • Chapter Four: MNC HQ-Foreign Subsidiary Unit Relationships
  • Chapter Five: A Nurturing Headquarters Is Good for the Multinational Corporation
  • Chapter Six: Formulating an International Growth Strategy
  • Chapter Seven: Strategic and Operational Scope of Foreign Subsidiary Units
  • Part C: Entrepreneurship, Innovation, and Competitiveness
  • Chapter Eight: Global Organizational Innovation Strategy
  • Chapter Nine: Managing Foreign Subsidiary Competitiveness
  • Chapter Ten: Entrepreneurial Challenges in Reformulating Firm’s Corporate Strategy
  • Chapter Eleven: Organizational Innovation for MNC and Foreign Subsidiaries
  • Part D: Training Expatriate Executives
  • Chapter Twelve: The Making of the United States Foreign Subsidiary CEO
  • Chapter Thirteen: Training Expatriates for Emerging (Developing) Market Countries
  • Chapter Fourteen: Training for the Overseas United States Managers
  • Chapter Fifteen: Strategic International Human Resource Management
  • Part E: Ethical and Social Responsibility Issues for the Foreign Subsidiary
  • Chapter Sixteen: Corporate Social Responsibility
  • Chapter Seventeen: Framework for Social Responsibility Strategies for Foreign Subsidiaries Operating in Diverse Cultural Environments
  • Chapter Eighteen: The MNC’s Global Ethics and Social Responsibility
  • Chapter Nineteen: Ethical Issues Analyses in International Management
  • Chapter Twenty: Ethical Conduct Protection Board for the Global Organization
  • Chapter Twenty-One: Conclusion


Figure 1.1: Multinational Corporation Strategy Paths: An Overview

Figure 1.2: Foreign Subsidiary Unit Strategy Development Process

Figure 2.1: A Model of Decision-Making for the Growth Process of a Foreign Subsidiary

Figure 2.2: MNC Firm’s Strategic Focus: A Framework for Evaluating a Country’s Infrastructures and Economic Systems

Figure 2.3: Organizational Strategies for Foreign Subsidiaries, Depending on Each Host Country’s Characteristics: A Case for Slow and Fast Developing Countries

Figure 6.1: A Model of Centralization and Decentralization for Strategic and Operational Decision-Making

Figure 6.2: A Decision-Making Model for a Multinational Corporation

Figure 6.3: Changing the MNC Organizational Culture

Figure 8.1: The Formulation Process for Global Organizational Innovation Strategy

Figure 8.2: The Global Organizational Goals, Innovation Needs Analyses, and Comprehensive Innovation Goals and Plans

Figure 8.3: A Model for the Process of Institutionalizing Innovation at All Levels of an MNC: Global HQ, Regional HQ, and Foreign Subsidiaries

Figure 11.1: A Model for a Foreign Subsidiary Unit’s Effective Innovation Process

Figure 11.2: The Phases in Foreign Subsidiary’s Innovation Strategy Formulation

Figure 11.3: A Model for Evaluating and Formulating New Foreign Business Venture Proposals

Figure 11.4: A Model for Formulating a New Country Entry or Expansion Strategy

Figure 12.1: Expatriate Training Objectives and Goals

Figure 12.2: The Expatriate Training Process: Its Dimensions and Goals

Figure 13.1: The Foreign Subsidiary’s Strategic Analysis for Determining the Expatriate’s Training Needs

Figure 13.2: Overall MNC and Foreign Subsidiary Strategic Analysis and the Expatriate Training Strategies

Figure 13.3: The Foreign Subsidiary’s Operating Systems and Culture: Foreign Subsidiary-Specific Training of the MNC Expatriate

Figure 15.1: A United States MNC’s Global Approach and Expatriate Strategies

Figure 15.2: Role Analysis of an Expatriate

Figure 17.1: Country Culture and Social Responsibility of a Foreign Subsidiary Unit

Figure 17.2: Stakeholder Approach and Social Responsibility

Figure 17.3: Major Factors Determining the Details of a Foreign Unit’s Social Responsibility Programs

Figure 20.1: Framework of Relationship between: (1) Ethical Conduct Protection Board, and (2) Strategic Management Process

Figure 20.2: Development of Ethical Conduct Guidelines and the Responsibilities for Their Implementation


Table 1.1: Multinational Corporation’s Headquarters’ Centricity and Functional Management Strategy-Mix

Table 1.2: Host Country Culture and Product Analyses for Multinational Strategic Analyses

Table 3.1: Organization Life Cycles of a Foreign Subsidiary Unit and Its Performance Expectations

Table 4.1: A Process Model for MNC Strategic Analysis for Improved Entrepreneurial and Innovative Performance

Table 4.2: A Generalized Framework for MNC Global Strategic Analyses Based On Organizational Typology

Table 4.3: A Decision-Making and Structural Framework for Improved Global MNC Performance

Table 4.4: Organization for Formulating and Implementing Entrepreneurial Strategies: The Three-Phase, Nine-Step Approach

Table 5.1: Strategic and Operational Decision-Making Process in an MNC: A Nurturing, Cooperative, and Collaborative Model

Table 6.1: The Dimensions of an Organization’s Multi-nationality

Table 7.1: MNC Strategic Decision-Making: Two Styles of Relationships between MNC HQ and Its Foreign Units

Table 7.2: MNC HQ-Foreign Units Relationship

Table 7.3: Successful MNC Focus on Relationship Issues

Table 8.1: A Model for a Systematic Process of Global Organizational Innovations: Three Phases with Nine Steps

Table 9.1: The Host Country’s Influences on a Foreign Unit’s Managerial Leadership

Table 9.2: Matching the Foreign Unit’s Leadership Style and Culture to the Host Country’s National Culture

Table 10.1: (Page 1) Reformulation of Foreign Subsidiary Unit’s Corporate Strategy: The Current Strategic and Operating Analysis- Page 1

Table 10.1: (Page 2) Reformulation of Foreign Subsidiary Unit’s Corporate Strategy: The Major Projected Future Trends and the Projected Future Strategy—Page 2

Table 11.1: A Model for the Overall MNC Organization’s Innovation Process (3 Cycles, 9 Steps)

Table 11.2: An Analysis of Market Information of a Foreign Subsidiary’s Host Country

Table 11.3: A Model for the Process of Institutionalizing Innovation at Each Level of an MNC: MNC’s HQ, Regional HQ, and Foreign Subsidiary Unit

Table 12.1: A Summary of the Current Research Findings and Suggestions

Table 15.1: An Expatriate’s Challenges in a Host Country

Table 16.1: Business Ethics and Social Responsibility as Integral Parts of the Strategic Management Process

Table 16.2: Formulating and Implementing Ethical Behavior Guidelines

Table 16.3: Guidelines for Implementing Ethical Social Responsibility Activities

Table 18.1: MNC’S Global Strategic Management and Foreign Subsidiaries’ Ethical and Social Responsibility Strategies

Table 18.2: A Foreign Subsidiary’s Strategic and Ethical and Social Responsibility Management Process

Table 18.3: MNC’s: (1) Core Global Values and Priorities and (2) Customized Foreign Subsidiary’s Detailed Ethical and Social Responsibility Strategies

Table 19.1: Ethical Issues in International Management: Nature of Norms and Preferred Practices as They Relate to Ethical Issues

Table 19.2: The Dimensions of the Foreign Subsidiary’s Ethical and Social Responsibility Strategies Regarding Its Host Country

Table 20.1: Development and Implementation of Proactive Strategies and Policies for Ethical Conduct


It is interesting to write a book like this. It is fun and enjoyable to play with ideas and conceptualize major combinations of related ideas.

The effective manager first analyzes and conceptualizes, he then makes a plan, and, finally he acts out his plan. Thinking should precede actions. A very experienced or veteran manager does not have to consciously do much of the step-by-step, detailed thinking and analysis. His experience gives him quick and ready-made solutions. From among many possible, alternative solutions, he knows which one he would prefer and why. He has reliable reflexes. They are proven practices. There is no need for him to re-invent the wheel. His repertoire is vast and rich. It is for him to explain to the manager-in-training and it is for the veteran manager to gather many related issues and make a composite picture and explain to the learner manager the dominant logic of how to manage such scenarios and situations. That is the essence of his experiences which he is transferring to the learner manager. The veteran manager has in his mind many of these experiences on clusters of specific topics, which if asked to do so; he can present to the listener a compressed conceptualization of his views and prescriptions for actions.

I follow a similar approach in writing my chapters. For each chapter, I first conceive of abstract ideas and seek explanations which may apply to the ideas. If the explanations fit then the next stage is to compile the issues and review them and visualize a tentative picture. I let creativity and imagination lead me. I try not to apply judgment at this stage, but reserve it for a later stage; for, doing so would trammel my creative flow of ideas.

The abstract ideas reflect my views, biases and assumptions. My past learning, work experiences and personal exposures are melded in these composite ideas. These are forged into my composite, tentative views on major topics. I have to keep an open mind for newer thinking and findings.

The next stage is to review the trends and strands of thoughts on the topics and re-shape my tentative, abstract views and ideas. Some shake-ups in my views and ideas are inevitable. This process in many instances would lead to some personal reflections and review in order to sort out any major contradictions and inconsistencies. I make a significant and conscious endeavor for thinking through the applications of the ideas for the practicing manager and the implications for practice. The abstract ideas are then expressed in the configuration of related ideas and issues. The figures and tables are born.

In writing each chapter, I explain the purpose of the chapter, review the literature and discuss it, and present the ideas of the chapter, and the conceptual figures and tables, together with their explanations. Then comes the part of the proof of the pudding is in the eating, and: (1) the recommendations for actions for the practicing manager, (2) the justifications for the recommendations for actions, and (3) the guidelines for effective implementations of the recommendations for actions. Although these are generalized recommendations, they address several of the likely decision-making situations.

Life is a continuum of thought and action. We could move from one end of the continuum to the other. Both are vital and they serve us best when we properly combine them. Actions without thought seldom solve new, difficult and unfamiliar problems. While past solutions may give us proven approaches to similar problems, it is the creative and imaginative thought that gives us innovative approaches for solving newer problems.

This book pursues the approach that good thought usually helps good practice, and practice helps refine good thinking. For a busy practitioner, there is little time for deeper reflection for ascertaining the root of the matter and seek lasting solutions for complex problems. It is the conceptualist who comes to his aid.


The book is about international management with a focus on the foreign subsidiary. It follows the theme that the future holds the multinational corporation (MNC) and foreign subsidiary true to their purpose of enlarging the scope of business around the world and transferring from one country to another country: people, values, ideas and views and perspectives, knowledge, arts and know-how and skills, lifestyles and standards of living, goods and services, equipment, finance, and (engineering and organizational) technologies.

The foreign subsidiary is an important entity within an MNC. Much of the future revenue and profit growth of the MNC will be from its foreign operations. Together with other subsidiaries, the foreign subsidiary represents the future growth and survival of the MNC. The expatriate who manages the foreign subsidiary is vital for managing the foreign performance of the MNCs. The expatriate will face a lot of challenges in his (or her) foreign subsidiary assignments. The MNC should train and mentor him, collaborate with him, and reward him better because he is the key to improved foreign subsidiary’s performance.

In Samuel Taylor Coleridge’s poem, “The Rime of the Ancient Mariner,” the old sailor found that his ship was destroyed and its crew was killed while on a difficult Antarctic expedition. He alone made it home in a boat. He found that he was more effective when he saw the positive side of his grim situation after he had reconciled with it, and he happily realized that the sea life around him were also God’s creatures. Inspired, he had a spiritual realization and he prayed. He became happier with his environment, and he found his way back to the safety of his home.

Just like the ancient mariner, an expatriate in a foreign country must acknowledge to himself that all the people in the foreign country are also God’s people with whom he can and should happily interact in their own cultural ways and life’s settings. It is only when he accepts others that they can accept him. He should be happy with his environment in order to be effective. He would get better results working through the host country people in the foreign subsidiary, and celebrating their different cultures. We can do so only if we are capable, confident, and happy with our environment.

In Glarus, Switzerland in the early 1840s, after years of bad harvest and no crops, and with more people than available jobs, the government of the town and canton (state) of Glarus asked for volunteers to go and find new life in the New World. They were even willing to support the effort and had even arranged for financing and loans for the exploration of finding suitable agricultural land for the settlement in the United States. The government of Glarus sent ahead two scouts with money for travel, exploring, and for buying suitable, arable land. After much time, difficulty, and explorations in Ohio, Indiana, and Illinois, they found and liked a settlement site in the southwestern part of Wisconsin. The hills reminded them of Switzerland. The two scouts bought 1,800 acres of land at $1.25 per acre. They called it New Glarus, naming it after their old town in their old country. Given the desperate economic situation in Glarus, Switzerland, 193 people volunteered, later left their homeland, and set sail for United States. They too arrived, joined the two scouts and settled in New Glarus, Wisconsin. They made it their cheese country.

In similar ways, an organization would go to foreign countries for growth and expansion, seeking newer markets and suppliers, and set up factories for the lower costs of operations. Similarly, the executives and specialists from their MNC’s HQ and home country operations may see better prospects and venture out to a foreign subsidiary and start a new career and life in a new, foreign country. They may be motivated to seek newer, foreign opportunities which would further their career.


XIV, 432
ISBN (Hardcover)
Publication date
2020 (March)
New York, Bern, Berlin, Bruxelles, Oxford, Wien, 2020. XIV, 432 pp., 27 b/w ill., 30 tables

Biographical notes

Yezdi H. Godiwalla (Author)

Yezdi H. Godiwalla is Emeritus Professor of Management, College of Business and Economics, University of Wisconsin-Whitewater, USA, where he was a professor for 41 years. He received awards for his teaching and research, including the 2013 W P Roseman Excellence in Teaching Award (the university's highest teaching award). He received his BA (Honours) from Ranchi University; his MBA from Indian Institute of Management-Ahmedabad; and his PhD from Oklahoma State University. He worked with Tata Steel and Godrej-Boyce in India.


Title: The Foreign Subsidiary
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448 pages