How are MNC managed and controlled
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- Multinational companies (MNCs) combine diverse mechanisms like planning, standardized procedures and training to control their foreign subsidiaries (Harzing and Sorge 2003). Various factors, either within or outside the company, influence the application and effectiveness of control mechanisms in MNCs.
MNCs employ various control mechanisms to coordinate units worldwide in order to meet global organizational objectives (Harzing and Sorge 2003). Despite the considerable number of definitions (Chow et al. 1999; Malmi and Brown 2008; Martinez and Jarillo 1991) a broad consensus exists on the meaning of output control in terms of achieving goals and results and comprising planning and reporting (Harzing 1999; Martinez and Jarillo 1991). Process controls specify desirable employee behavior and include centralization and standardization, as well as written manuals, to ensure that employees adhere to specified processes (Brenner and Ambos 2013). The last category encompasses a broad spectrum of mechanisms such as socialization, communication and training (Harzing 1999). According to Brenner and Ambos (2013) these formal and informal mechanisms are labeled social control and serve to spread corporate culture and values in order to build acceptance for other control mechanisms. The extent of control indicates the tightness of control an organization exerts to achieve its objectives, e.g., in terms of frequency, accuracy and combination of various MCs (Merchant and Van der Stede 2017).
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