User:Kenny Cheung

Coordinated Federation

Since 1950s, many American companies have gained advantages in technology and have developed new management processes which help them leverage their new strengths in foreign countries. Thus, some people considered the coordinated federation as an American style because a coordinated federation was developed while American companies operated successfully.

Of the three organizational configuration models, the coordinated federation is the most effective because it not only allows the subsidiaries autonomy to deal with local markets but, because of the strong ties to the central companies, facilitates substantial feedback for improved efficiency among the subsidiaries. A coordinated federation is a form of organizational configuration models. This federation had been adapted by many of the US based companies. A coordinated federation, a structural configuration which many international organizations utilize, normally describes companies with a reputation for professional management. Such a structure contains many assets and resources which are decentralized to the sub-companies but still somewhat controlled by the parent company. The systems-based control between domestic operations and foreign operations is tight, formal and systematically controlled. The connection provides a continuous flow of information and data which are obtained and analyzed by the central staff. Moreover, the central staff can use the information to manage and to coordinate its other sub-companies. Normally, the technology from parent companies is adapted to local needs. Although the subsidiaries are often free to adapt products or strategies for local needs, they still greatly depend on or need to be approved by the parent companies for new products, strategies, process, and ideas. For example, when a company wants to develop a new product or a new service, the company needs approval from the parent companies. In addition, the resulting strategies and promotions still need approvals from headquarters as well. The decisions and responsibilities are decentralized to the subsidiary companies. Therefore, if there are any glaring faults with the company, the responsible managers of the company might consider demotion, salary paring, bonus cancellations, etc. to punish those responsible for the faults. More often than not, subsidiary companies are viewed by headquarters as overseas extensions of the domestic operation, even though the principle intention of developing foreign arms is to leverage the influences, capabilities and resources developed in the homeland. Perhaps, this attitude results from the assumption that all ideas, developments, resources, and technologies eminate from the parent companies.

For example, Volkswagen Group is an example of coordinated federations. Volkswagen is an automobile manufacturer and operates many subsidies: such as Audi, Bentley Motors, Bugatti Automobiles, Automobili Lamborghini, SEAT, Skoda Auto, and Scania. Most technologies and skills are provided by the parent companies but are slightly modified by the sub companies. In the case of Volkswagen, the platform and gearbox were shared by VW Golf, and, the Audi A3 hatchback. This “parent” technology is shared with the sub company. Moreover, the engine of the fastest and most powerful production vehicle on earth, Bugatti Veyron, shares many components with Volkswagen’s modular engine family. Moreover, the Bugatti Veyron exterior was designed by Jozef Kaban of Volkswagen instead of the Bugatti in-house designers.