Foreign subsidiaries are companies whose majority stake is owned by the parent company based and operating in a different country. The parent company owns and controls the subsidiary a wholly owned subsidiary when it owns 100% stake (Jiang et al., 2016, p 439). Samsung is a South Korean conglomerate headquartered in Seocho district Seoul. Samsung has divisions which deal with electronics, engineering, insurance, and heavy industries in early 2015 Samsung acquired Simpress for about 100 million USD as one of its multiple subsidiaries. Simpress is the largest printing company in Brazil.
Samsung was looking up to expand its business affiliation in South America the region which is poised to experience tremendous economic growth and development. And also expand on its numerous source of income. Simpress, therefore, operated in Brazil as a wholly owned subsidiary of Samsung conglomerate based in South Korea Acquisition of Simpress would stabilise Samsung’s earning and bolster business to business operations. Subsidising a Brazilian company provides a foothold for the company in vast Latin America. It also created various opportunities for the parent company in the processing of business outsourcing. Another important reason why this consolidation happened is the prospects for growth in an emerging and developing market (Chung, C. C., & Beamish, P. W. 2005, p 40).
Delegate your assignment to our experts and they will do the rest.
The association was very beneficial to both companies. Samsung was able to enter into the printing business in Latin America a region with a prospect for continuous growth. Success in the area was notable when Samsung opened its first design centre in Sau Paulo two years later. Simpress, on the other hand, experienced a superb growth rate since the consolidation and was able to cement its position as the leading printing company in the region. It also gained strong financial muscles to enable it to operate successfully in other areas. This consolidation was successful enough to lure HP printing which paid more than 1 billion USD to acquire Samsung printer business in November 2017 .
References
Jiang, G. F., Holburn, G. L., & Beamish, P. W. (2016). The spatial structure of foreign subsidiaries and MNE expansion strategy. Journal of World Business , 51 (3), 438-450.
Chung, C. C., & Beamish, P. W. (2005). The impact of institutional reforms on characteristics and survival of foreign subsidiaries in emerging economies. Journal of Management Studies , 42 (1), 35-62.
