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.
[...] Conclusions and limitations of the study The purpose of this study is to analyse the effects of an internationalization strategy on the management control system of a company. In our case study, the firm tends to have more and more formal controls as she goes international. Moreover, it appears to have a link between internationalization strategy and formality of the management control system which comes from the need to have reliable information at the right time. Also, we can notice that the need to clarify complexity increase with the degree of internationalization and that formalism can help in dealing with such complexity. [...]
[...] Mr.Y explained us that a strategy of internationalization consisted in finding a good balance between bureaucratization and freedom of the subsidiary companies. Help them to develop Top-down accompaniment This system of accompaniment aims at helping subsidiaries to apply the directives or to respect the processes. In France, the brand Aubaine allowed selling surstocks, but it was not the case in the foreign subsidiaries. Thus, the purpose was to make subsidiaries capable of selling these surstocks. Thus, devices were set up way in the fact that Aubaine France can sell stocks to Aubaine Austria (for example) Bottom-up accompaniment This system of accompanying allows to listening the demands resulting from subsidiaries and to understand the differences which exist between subsidiaries. [...]
[...] In this section, we will focus on the impact of culture in the scale of a company which has subsidiaries in various countries. Indeed, we would like to make a link between internationalization strategy and the management of cultural aspects in a global context: Which impact could culture have on MCS? Which problems does it imply for managers? We chose two texts which can guide us in our research. The first article is: Management Control Systems in a Global Economy by John C. Lere and Kris Portz Then, we will develop Hélène Löning's paper: Universel ou local? [...]
[...] Thus, our problematic could be the following one: How orientation towards an internationalization strategy can affect the management control system of a company? In a more precise way, we want to determine if internationalization strategy implies a specific formalism and centralization process. Then, we want to consider cultural differences and their impacts on MCS. Furthermore, we would like to specify that we will only focus on the relationships between parent company and its subsidiaries; that is to say that we will only analyse the MCS a parent company can set up in order to control its own subsidiaries. [...]
[...] Does internationalisation strategy impact the formality of the management control system of a company? 2. Is the MCS of a multinational corporation usually imposed to the subsidiaries in order to facilitate the control ? 3. Does internationalization strategy cause control problems due to cultural differences between home country and host countries? Research methodology The study is based on data collected in the headquarters of an international mail-order selling company: La Redoute, Lille. The Case Study has been found to be the most appropriate technique for our study. [...]
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