Management Control Of The Tk Corporate Parent And Subsidiary Companies

Being one of the earliest companies specializing in commercial note printing in China, TK Security Printing Co. Ltd. (hereafter TK) is mainly engaged in commercial note printing and paper product processing. After years of steady development, TK has set up three subsidiary companies in Zhengzhou, Beijing, and Xinjiang, and is currently a top participant in the market of commercial note printing.TK does not have much experience in managing its subsidiaries as they are at an early stage of establishment. Managing models are still being tested and controlling system is far from perfection. In the last couple of years, some problems arose in practical managing work. Badly positioned in its functionality, the subsidiaries were not managed in a way that fits in the industry, and therefore became obstacle for the parent as a whole to make full use of its resources. It is essentially important and necessary to reform the current managing models of the subsidiary.Targeting on top management of the parent and the subsidiaries, the author designed survey on factors residing in the parent and the subsidiary companies that may have impact on independent development of the latter. The author did comprehensive analysis of the survey result, and after consulting related theories on parent-subsidiary company management, presented a new management model for TK subsidiary. The new model promotes centralized management and emphasizes the importance of process control of subsidiary by the parent company. Therefore, the parent not only supervises the subsidiary through the latter's board of directors, but also exercises real-time management through its functional departments over corresponding departments in the subsidiary.Since both the parent and the subsidiary companies are independent legal persons, it is inappropriate for the parent to have direct control and governance over the subsidiary. Indirect coordination and supervision should be done by improving and perfecting the management of the subsidiary. Such can be done through channels of human resource and financial departments and by carrying out performance appraisal...