Should Corporate Parents Interfere in the Strategies of Diversified Essay

Should Corporate Parents Interfere in the Strategies of Diversified Groups of Companies - Essay ExampleMaybe the minor confederation does the same type of product or service as the lift but more than often not. Some corporate strategies involve micro-managing the interests of the get over while others believe that letting the child manage its own affairs will result in a profitable win-win for both. So the question corpse then, how much control should the parent exercise over the child?DiscussionIn the perfect corporate parent and child relationship the parent community is simply there to guide as it were. As in the physical parent and child relationship, the parent hopes the child will grow and prosper. No parent would ever expect his four year old child to stagnate there and on the same token the company that prospered in1998 to keep the same strategies as then. Times change, peoples needs change, and companies should be flexible enough to keep abreast of those changes. If not , the cash cow of 1998 might have turned into the dog of 2012. Therefore, the parent company should train and coach, while helping the child prepare for the future, only intervening when absolutely necessary for both of their continued successes.A good example of a company that failed to envision the future and failed to intervene was the now defunct Packard car company. From the early days of the automobile, the Packard name stood beside Cadillac and Lincoln as the symbol of luxury American cars. Yet the company made a fatal mistake when it acquired Studebaker in 1953, in response to decreased sales because of cutthroat competition by the considerable Three. Even though it was financially solvent, Packard executives failed to see how troubled Studebaker actually was. A short five years later the last Packard was made and the Company essay to continue on as its child. By 1966, the entire company was bankrupt. Speaking of car companies, in 2008 General Motors found itself in financ ial trouble and receive a Government loan. As part of its restructuring activities, and under pressure from Congress, the pucker agreed to divest itself of three divisions, one of which was Hummer. Although fairly profitable, Hummer was seen as a ballast company that would eventually be driven out by its gas-guzzling SUVs. So GM tried to sell the division but the deal ferine through and Hummer was retired in 2010. The above were car companies though that owned other car companies. What about when the childs core business is all told different from the parents? Back to GM, they owned appliance giant Frigidaire for sixty years. Yet their meddling in company affairs and trying to fit the car model to home appliances, as well as foreign competition, caused Frigidaire to lose a whopping forty million dollars in1978. So GM saw them as an underperforming dog and sold the company to bloodless Consolidated Industries in 1979. White likewise interfered with company business in such a musical mode that research and new product development was retarded for over a decade, almost a fatal blow to the ever volatile appliance business. Fortunately, White was likewise acquired by the Swedish firm Electrolux in the late eighties. Applying the European model to Frigidaire and making the brand visible helped them dramatically by the middle 1990s and although behind industry leader Whirlpool in overall sales revenue, Frigidaire is still around and fairly healthy (Frigidaire). PepsiCo is a good example of a global corporation that leads its subsidiaries properly and makes just enough interference to ensure that profitability is obtained by both parent and child. True, most if not all of the conglomerates secondary companies deal with some segment of the food industry