Performance management is a process that enables the multinational to evaluate and continually improve individually, subsidiary unit and corporate performance against clearly defined goals.
Multinational Performance Management
A multinational makes strategic choices based on economic and political imperatives. The multinational enterprise has specific expectations for each subsidiary, venture profits in terms of market performance, total profits and competitiveness. However when measuring performance against expectations constraints do exist.
* Whole versus Part
A multinational being a single entity faces a global environment, which means that it simultaneously confronts differing departments. Integration and control imperatives place the multinational in a position where it decides the good for the whole is more important than one subsidiary short term profitability.
* Non-comparable Data
Sales in Peru may be booming but the headquarters management was unaware that Peruvian accounting rules, sales on consignment are counted as firm sales. Physical measures of performance may be easier to interpret than in above examples. Quality control checks can vary widely from one country to another, import tariffs can distort pricing schedules. These factors can make an objective appraisal of subsidiary performance problematic and may complicate the appraisal of subsidiary managers.
* Volatility of the global market
The turbulence of the global environment requires that long term goals be flexible in order to respond to potential market contingences. Managers may be a pusrusing strategy that no longer fits the new environment. Some examples are the bird flu epidemic, the spread of international terrorism and the adoption of IAS (International Accounting Standards. Each of these events has had profound implications of the global and local strategies and because subsidiaries operate under such volatility they must tailor...