Developing a Successful Subsidiary Strategy

Chapter 2The View from the Top

DOI: 10.4324/9781003425502-3

At its most fundamental level, the relationship between a subsidiary and its parent can be thought of as one between a supplier and a customer. The subsidiary seeks to develop its business by providing resources that maximise the value delivered to its sole customer. The parent wants the subsidiary to perform to its greatest potential as a supplier. However, it retains the right to seek alternative suppliers, while remaining subject to the constraints to any binding commitments that underpin the relationship (e.g., contractual agreements, sunk capital cost and exit costs). Best business practice suggests that everything should start with an understanding of the customer, so it is ...