SUBSIDIARY INITIATIVES TO DEVELOP NEW MARKETS

Faced with the possible closing of his NCR subsidiary in Dundee, Scotl and, manager Jim Adamson worked on improving manufacturing quality and restoring the confidence of customers. He also began to develop a vis ion for Dundee as NCR's strategic center for the ATM business. When th e Ohio headquarters resisted Adamson's plans, he persevered, cooperati ng with people there while sponsoring independent research in Dundee. Five years later, the Scottish subsidiary won NCR's global ATM busines s; the next year, its market share surpassed world competitors IBM and Diebold. The Dundee case is an example of subsidiary initiative: the proactive, deliberate pursuit of a new business opportunity by a subsi diary company undertaken to expand the subsidiary's scope of responsib ility Subsidiary initiative enables MNCs to tap int opportunities arou nd the world, and, through competition among units, it enhances operat ional efficiency. But these initiatives face obstacles. Managers often encounter a ''corporate immune system'' that works against their effo rts. They need savvy, persistence, and luck to break through corporate barriers. Studying subsidiary initiatives in five countries, the auth ors found that they took two forms. externally focused, involving new opportunities in the marketplace, and internally focused, involving op portunities within the boundaries of the corporation. Common to both t ypes was an entrepreneurial component. In external initiatives, a cham pion emerged in the early stages. These individuals tested the idea in a small way. As the project took shape, they sought allies - local cu stomers or mentors in the home office. Finally, once the product was v iable, they formally presented it to headquarters, in internal initiat ives, subsidiary managers were an the lookout for new activities in th e corporation that dovetailed with their capabilities. These units nee ded to be well integrated into the corporate system and have a good re putation; champions of internal initiatives had to pursue a more ortho dox line of attack through the formal lines of authority. Based on the se observations, the authors suggest two key roles for foreign subsidi aries: market development, in which the subsidiary identifies and acts on new business opportunities in its local market, and network optimi zation, in which the subsidiary seeks out and eliminates inefficient a ctivities within the multinational network. Subsidiary initiative can yield outstanding successes for large multinationals. But subsidiary a nd parent-company managers will have to make shifts in their roles. Fo r those who foster the attitudes and behaviors that allow initiatives ro flourish, the rewards will be substantial.