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Multinationals

Week 2 Lecture 3 - Multinational Companies
by

Lissa Monk

on 19 September 2013

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Transcript of Multinationals

Multinationals
Transnational Corporation
Background
Effect on Business Environment
Multinationals (MNC) or trans national co-operation (TNC), or multinational enterprise (MNE)
Conclusion
Negative
International Strategy
Globalisation

Technology

Deregulation
Key drivers of change?
Huge?
Powerful?
Influential?

How do we measure these attributes?
Are they beneficial or are they a threat?
a corporation that has its management headquarters in one country and operates in several other countries
East India Company (17th-19th century)
Formed for pursuing trade with the East Indies, ended up trading with the Indian subcontinent and China
Ruled large swathes of India,
First modern multinational corporation?
Held a privileged position in the British government
History
Why be multinational?
Why decide to do business in a different country?
Do not know the laws, local customs or business practices
More efficient to combine assets of value overseas with local factors of production at lower costs?
Market imperfection!
anything
that interferes with trade
Why did MNCs develop?
Response to downturns in national economies
Exploit economies of scale, reduce costs
Developments in transportation, information and communications technology
Growth by acquisition or joint venture
Protection against competition?
Access to raw materials and new markets
Positive
only a few businesses can compete
"flakes that are frosted" vs. Kellogg's Frosties
Taxation
Force smaller busineses out
growth forces the company to raise their prices
Look elsewhere for same product?
Product diversification
Business advantage?
Expertise
capabilities to take on large contracts.
Global presence
Bargaining powers
Social Responsibility?
Multinational corporations are seen as large, utilitarian enterprises with little or no regard for the social and economic well-being of the countries in which they operate
True or False?
Technology means local time zone less important
Local laws always apply
Globalisation = Less likely to be “loyal” to home country
response to globalisation
Strategy aligned to
cost + responsibility
International
Multi-domestic
Global
Export product
Marketing is local
early stage in development?
Multi-domestic
Operations in one or more overseas country
local products
for local markets
decentralisation = control problems
Duplication
Global
Focus on cost reduction
Switching operations to low-cost countries
Product rationalisation
Economies of scale
Transnational?
Does it exist?
joint ventures and alliances
Mentality rather than strategy
Flexibility, responsiveness and innovation
Exporting

Licensing

Franchising

Off-shore outsourcing

Wholly owned subsidiary

Joint venture
multi-domestic + global
economies of scale plus local responsiveness
Corporate rather than cultural
INTER-FIRM ALLIANCES
Asset augmenting ?
Asset exploiting ?
collaboration rather than control as part of a global strategy
Does the classic model still predominate in transitional markets?
Perfect market information
No participant with market power to set prices
No barriers to entry or exit
Equal access to production technology
Full transcript