The impact of internationalization strategy on management control system

Résumé du document

In an increasingly global economy, corporations need to develop more and more an efficient and reliable management control system (MCS) in their home countries and also in their subsidiaries abroad. This study analyses 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 find an answer to our problems, 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 such 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.

Extraits

[...] Hélène Löning concluded her paper wondering the possibility of a universal culture in management. Moreover she said that context of globalization associated with the cultural characteristics that must be taken into account offers new challenges to managers.” After reviewing the literature, we can notice that the ideal situation for MNC would be a good balance between local and global in order to grant autonomy to subsidiaries dealing with organizational, cultural and environmental aspects. Nevertheless, we observe that MCS are often imposed by HQ to subsidiaries. [...]

[...] Today, we meet in La Redoute only two types of management control as piloting tool. The first one takes essentially charge with analyzing the commercial margin of the group. The second aims at analyzing the margin on variable cost. Axes of piloting are then proposed to the various subsidiaries. Concerning the piloting of the group, only these two axes of analysis are set up for the moment. HYP Control problems increase when firms develop an internationalisation strategy due to cultural differences In all the subsidiaries, the general directors, financial directors are some French expatriate. [...]

[...] This study analyses the effects of an internationalisation 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. [...]

[...] That's why we could ask ourselves if the fact of mixing the culture, as it is the case in the subsidiaries of La Redoute, is a better solution than having people from the nationality of the country in which the subsidiary is. 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. [...]

[...] Choice of subject company and interviewees The subject of our study is the international mail-order selling company La Redoute, Lille. We had different companies in mind before beginning our study. We also thought for instance to La Mondiale, an insurance company which are also using an internationalization process in its activities. Nevertheless our choice has turned towards La Redoute because the international presence of this company is much more important than La Mondiale's one. To ensure people's concern makes sense, we precisely defined whom to interview. [...]