By Michel Ghertman, Margaret Allen (auth.)
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Extra info for An Introduction to the Multinationals
It follows that they have important social and cultural consequences on the creation of wealth, employment and patterns of consumption. But in each of these areas the multinational company is in contact with other social actors such as governments, labour unions, or different associations which can counter, control, or reorganize the social consequences. The success of the multinational depends therefore as much on the reactions of the other forces in society which interact with and influence it, as it does on the company's competitors.
The most important development in the relations between the parent company and its subsidiary is that of the establishment of the budget. To begin with, the general management of the foreign subsidiary drafts a budget based on its forecast of sales, expenses and profit margin. Next, the proposed How Multinationals Function 41 budget is studied by the general management of the parent group in relation to the objectives of the subsidiary. Only then, when the budgets of all the subsidiaries have been approved, does the general management of the parent company decide its total budget at the international level.
25 Already, in 1888, an American company had started working under a Daimler licence. The first American Mercedes were produced from this New York factory in 1904. Its activity ended with the First World War, in 1914. Fiat was another European automobile company which became multinational very early. It first opened a subsidiary in Vienna in 1907, another in Poughkeepsie (New York State) in 1909, and had a manufacturing plant in Russia as early as 1912. The greatest phase of multinationalization in the automobile industry, however, came from the American groups, mainly Ford and General Motors.
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