Multinational subsidiary evolution : Vodafone and its South African subsidiary, Vodacom

Abstract

Multinational Corporations (MNCs) increasingly realise the importance of acknowledging their dispersed subunits as individual organisations with the potential to formulate strategies and implement autonomous decision making in order to ensure the MNC‟s competitive viability. As MNCs need to remain responsive to the distinctive host markets‟ needs in order to retain and grow their market share, knowledge of the evolution of its subsidiaries becomes vital. Vodacom‟s new role as a subsidiary of Vodafone since its acquisition by the MNC in 2009, make it an ideal test subject to evaluate the roles of a subsidiary‟s mandates and its evolution in relation to the parent company from a South African perspective. The study summarised in this paper highlights a theoretically-based evaluation of the subsidiary-role frameworks, and presents new knowledge gained from in-depth interviews conducted with key personnel. The investigation suggests Vodacom is becoming an Active Subsidiary, showing high decision-making autonomy, operating and executing its decision making within the Vodafone procedures, policies and strategy. This has a marked effect on all business functions. Further research could focus on the processes of evolution of the subsidiary roles, and the contribution and strategic positioning of Centre of Excellence in the MNCs.