Reaching Cost Visibility Into Subsidiary Distribution
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Foreign subsidiaries are business units within multinational companies operating under control of parent organizations. Subsidiaries possess distinct arrays of information that oftentimes happen to be out of the parent’s reach. Visibility into subsidiary operations is nowadays becoming more of a need than a luxury. Distribution, representing activities needed to deliver finished products from the end of production to customers, as well as the costs related to distribution are among the many areas of subsidiary’s business operations that oftentimes are not thoroughly visible to the parent organization. This study is based on the assignment of the case company and the objective is to develop a tool for parent organization that would enable cost visibility into distribution of its foreign subsidiary. The objective is achieved by creation of the subsidiary distribution cost database, the use of which provides valuable cost information on subsidiary’s distribution and, consequently, facilitates the attainment of cost visibility into subsidiary distribution. In order to address the problem, based on the reviewed literature, certain conceptual framework is developed and applied to a real case. In terms of research methodology, this study utilizes the research of empirical type with the purpose of theory and application. Moreover, case study research strategy is followed and such data generation methods as the use of existing materials, interviewing and action science are exploited. In the result of this study, the case company receives a valuable tool eliminating uncertainty of subsidiary’s distribution as well as providing traceability of subsidiary’s transportation costs. Case company reinforces its parental control and enriches the ability to evaluate subsidiary’s performance taking into account the actual costs of transportation. The study provides the basis for cost-efficient adjustment of subsidiary’s distribution strategy as well as optimization of related business processes.