Performance Evaluation of Foreign Subsidiaries
A Critical Analysis
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Seminar paper from the year 2008 in the subject Business economics - Controlling, grade: 1,7, European Business School - International University Schloß Reichartshausen Oestrich-Winkel, course: Seminar Controlling, language: English, abstract: Long before the globalisation had become a buzz word and an impetus for companies toinvest abroad, enterprises enlarged their "business playing field" into foreign countriesfor various reasons, such as to capture a new market, to secure resources, or to take advantageof local cost levels. Therefore, subsidiaries are heavily involved in the valuecreation...
Seminar paper from the year 2008 in the subject Business economics - Controlling, grade: 1,7, European Business School - International University Schloß Reichartshausen Oestrich-Winkel, course: Seminar Controlling, language: English, abstract: Long before the globalisation had become a buzz word and an impetus for companies toinvest abroad, enterprises enlarged their "business playing field" into foreign countriesfor various reasons, such as to capture a new market, to secure resources, or to take advantageof local cost levels. Therefore, subsidiaries are heavily involved in the valuecreation process for and within multinational corporations (MNCs). However, despitethe fact that the measurement of performance is crucial for globally active companiesnot only in steering the value creation for the MNC but also, for example, in fosteringinternational expansion or guiding resource allocation, MNCs differ significantly in theextent to which they are aware of the performance of their subsidiaries.Due to the fact that strategic decisions regarding the global expansion of a MNC requirea wide and clear information basis to be able to assess how successfully a foreign subsidiaryhas conducted its business or under what possibly unfavourable environmentalconditions the business results were achieved, multinational enterprises have to implementa system for evaluating the performance of their foreign subsidiaries and theirmanagement. Therefore, this paper aims to analyse the central aspects to consider in theevaluation of the performance of foreign subsidiaries.This paper is divided into five chapters. After a short introduction to the theoreticalbackground of performance evaluation in chapter 2, the paper continues in chapter 3with the central issues of an effective performance evaluation system for foreign subsidiarieswith a clear focus on the aspect of separating managerial and subsidiary performance.Then chapter 4 illustrates the measures used for evaluating foreign subsidiaryperformance. Finally, the paper concludes by emphasising that an MNC can properlyevaluate the performance of it foreign subsidiaries only by considering the specific environmentalfactors of the foreign country, separating managerial and subsidiary performance,and supplementing financial with nonfinancial measurements.[...]
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