...FOREIGN DIRECT INVESTMENT AND THE MULTINATIONAL CORPORATION CHAPTER 2. 2.1. INTRODUCTION International business activity is by no means a recent phenomenon. The lives of Phoenicians and Carthaginians, in the ancient world, were deeply dependent on international business. This economic activity included foreign direct investment (FDI), joint ventures and strategic alliances, among other forms of internationalisation (Moore and Lewis, 1999). Several multinational corporations (MNEs) can also be identified in Europe in the middle ages and in the beginning of the modern era (Dunning, 1993a; Jones, 1996). The origins of modern international business activity however, are associated with the industrial revolution. Modern MNEs, in particular, have their roots in the massive international movement of factors that took place in the nineteenth century (Dunning, 1993a: p.99). Resource-seeking was the most common motivation of FDI in this period, even if by 1850 many firms had already crossed the Atlantic, in both directions, in what can be defined as market-seeking investment (Dunning, 1993a: p.100; Jones, 1996: p.5). 8 Despite the presence of FDI, most foreign investment in the nineteenth century - and indeed until the late 1940s – was portfolio capital. As a result, international business activity was largely ignored in economic theory until the late 1950s. On the one hand, the phenomenon did not have a major perceived economic impact. It was widely assumed that MNEs were...
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...ABSTRACT In recent years, many companies have increased their presence in the international market. This paper studies the companies need for internationalisation as it focuses on the factors companies must consider before entering new markets or expanding abroad. Many factors that lead companies to invest in the international market have been identified. The research is based on theories. Internationalization factors that motivate companies to establish themselves abroad will be included in the theories. The identified categories include of resource, market, strategic resources, efficiency and seeking motives. Network seeking motives has been identified as an additional motive. The research was conducted based on the qualitative approach. Existing information of related to the motives for internationalisation and the factors to consider before internationalisation were used. The secondary material includes peer-reviewed journals, international business books and research papers. A case study of Chrysodalia Ltd was used to explain the PESTEL and SWOT analysis. Based on the case, it is concluded that companies internationalised in order to increase their competitive advantage. Companies rely on factors, which include Resource seeking, Market seeking, Efficiency seeking, Strategic asset seeking to create competitive advantage in an already saturate market. The factors that the company should consider before internationalising are proactive motivations such as home factors,...
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...The Fundamentals of International Business | | Assignment question: There are several theories that seek to explain why FDI takes place. These theories try to explain why firms go to the trouble of acquiring or establishing operations abroad. Such theory includes Dunning’s Eclectic Paradigm, Vernon’s Life Cycle and Knickerbocker’s Model to name a few. Your academic paper should illustrate the use of such theories to evaluate the rationale for foreign direct investment for a leading player in your chosen industry. | | | | Student: Matteo Noris ID: 10224550 Course: (BA) International Business Assignment Due Date: 25th January 2012 Unit Tutor: Agnieszka Chidlow Matteo Noris ID: 10224550 Fundamentals of the International Business Submission Date: Wednesday 25th January 2012 Weighting: 30% of the total mark for the Unit * Chosen Assignment Question : 2 Foreign Direct Investment There are several theories that seek to explain why FDI takes place. These theories try to explain why firms go to the trouble of acquiring or establishing operations abroad. Such theories include Dunning’s Eclectic Paradigm, Vernon’s Life Cycle and Knickerbocker’s Model to name a few. Your academic paper should illustrate the use of such theories to evaluate the rationale for foreign direct investment for a leading player in your chosen industry. Contents Page Contents Page 2 Abstract 3 Introduction 3 Main Body 4 Conclusions 8 References...
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...internationalization process will be examined in depth and supported by evidence from the organisation known as ‘British Petroleum’. The purpose of this assignment is to grasp a comprehensive understanding of the critical aspects of British Petroleum’s internationalization process, the implications it holds for the international business environment and achieving their internationalization objectives through contemporary context. Overview of organisation When discussing globalization it is critical to emphasis the importance a multinational corporation holds over the international business environment. A Multinational corporation (MNC) is an organisation that has registered facilities and assets in business endeavors in more than one country. MNC’s are highlighted for their success in incorporating products, ideas and cultures from more than one country in order to achieve a common goal. With reference to the definition of a MNC, British Petroleum (BP) is undoubtedly a MNC as it undergoes its business ventures throughout the entire world and in countries such as China, Australia, Canada and Mexico. A key aspect of MNC’s is to multi nationalize every aspect of your organisation when aiming to expand internationally, BP are successful in ensuring that every branch of BP around the world has the common sustainable goals. BP has a direct correlation in Foreign Direct Investment (FDI). A FDI is when an organisation finances into production or business ventures in an external...
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...Internationalisation and the Smaller Firm: A Review of Contemporary Empirical Research Author(s): Nicole E. Coviello and Andrew McAuley Reviewed work(s): Source: MIR: Management International Review, Vol. 39, No. 3 (1999 3rd Quarter), pp. 223-256 Published by: Springer Stable URL: http://www.jstor.org/stable/40835788 . Accessed: 19/01/2013 08:47 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. . Springer is collaborating with JSTOR to digitize, preserve and extend access to MIR: Management International Review. http://www.jstor.org This content downloaded on Sat, 19 Jan 2013 08:47:56 AM All use subject to JSTOR Terms and Conditions mir vol. 39, 1999/3, 223-256 pp. mir - ^^ · Management International Review © Gabler Verlag1999 Nicole Ε. Coviello/Andrew McAuley and the Smaller Firm: Internationalisation A Review of ContemporaryEmpirical Research1 Abstract ■ Thispaperreviews assessesrecent and research theinternationalon empirical inthecontext Foreign isation smaller of of ...
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...Int. J. of the Economics of Business, Vol. 8, No. 2, 2001, pp. 173 ± 190 The Eclectic (OLI) Paradigm of International Production: Past, Present and Future JOHN H. DUNNING ABSTRACT This article describes the origins, and traces the subsequent evolution of the eclectic paradigm from the mid-1950s to the present day. It does so in the light of the changing characteristics of MNE activity and of the global economic scenario. The article concludes by asserting that the eclectic paradigm still remains a powerful and robust framework for examining contextual specific theories of foreign direct investment and international production. Key words: Eclectic paradigm; FDI; MNEs; Strategy; International production; Alliances. JEL classifications: F21, F23, M21. 1. Its Origins Although the eclectic paradigm (or the eclectic theory as it was initially called) of international production was first put forward by the present author at a Nobel Symposium in Stockholm in 1976, its origins can be traced back to the mid-1950s. At that time, I was writing my PhD thesis, later to be published as a book (Dunning, 1958), on US direct investment in British manufacturing industry. Earlier research by Rostas (1948), Frankel (1955) and some Anglo ± American study teams1 had shown that the labour productivity in US manufacturing industry was, on average, 2 to 5 times higher than that in UK industry. The question this fact posed in my mind was: was this difference in productivity a reflection of the...
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...Executing a global growth strategy at Lenovo For the analysis of the process of globalization has been chosen Lenovo, currently classified at 370 in the ranking of Fortune Global 500. It came into existence in 2005 when Legend Holdings acquired the former Personal Computer Division of IBM, the company that invented the PC industry in 1981. Today, Lenovo is a $21 billion personal technology company and the world's second-largest PC vendor, with more than 26,000 employees serving customers in more than 160 countries The choice of this company prompted me my recent visit to one of the factories Lenovo, in Shenzhen, and a huge impression on me that this visit was exerted. This well-organized corporation attaches great importance to the planning of its development and is very determined in its objectives. Position that the company has achieved on very difficult market of personal computers proves accurate transformation strategy from local leader into a powerful global player. Lenovo's position in any part of it is not the work of chance. The following sections concentrate on the discussion of Lenovo’s core competence and its globalisation strategy. Lenovo was originally called Legend Beijing, and was founded in 1984 by Liu Chuanzhi along with ten colleagues at the Computer Technology Institute of the Chinese Academy of Sciences (CAS). With an initial investment of 200,000 Yuan, the company was established with the aim of commercializing the research and development activities...
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...FOREIGN DIRECT INVESTMENT – LOCATION ATTRACTIVENESS FOR RETAILING FIRMS IN THE EUROPEAN UNION1 Pervez N. Ghauri Manchester School of Management, UMIST United Kingdom Email: Pervez.Ghauri@umist.ac.uk Ulf Elg Dep. of Business Administration, School of Economics and Mgmt, Lund University, Sweden Email: ulf.elg@fek.lu.se Rudolf R. Sinkovics Manchester School of Management, UMIST United Kingdom Email: Rudolf.Sinkovics@umist.ac.uk 1 The authors would like to thank Handelsbanken’s Research Foundations for financial support. FOREIGN DIRECT INVESTMENT – LOCATION ATTRACTIVENESS FOR RETAILING FIRMS IN THE EUROPEAN UNION Abstract For politicians and country representatives it is becoming more and more important to look into ways to attract Foreign Direct Investments (FDI). Not only are successful location decisions of multinational companies good news for surviving in the political system, but related economic and social development implications necessitate a more comprehensive view on whether there is a race to attract FDI in Europe. And if so, what are its implications on different industries and societies within the EU. This paper focuses on the retailing industry and mandates an understanding of managerial decision making: Why do retailing companies enter particular country markets and what are the factors that determine a country’s attractiveness? A conceptual model is developed to understand the factors, corporate as well as market characteristics, which influence companies...
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...School of ManagementAssignment Cover Sheetfor submission of individual and group work | Course / Unit Code | Assignment Number | Assignment due date | Group / Session name (if applicable) | BUSM1227 | 1 | 27/02/2012 | Class B | Course / Unit Name | Program Title | International Business | Bachelor of Business (Management) – Full Time | Lecturer / Teacher’s Name | Tutor / Marker’s Name (if applicable) | Wenda Leong | | This statement should be completed and signed by the student(s) participating in preparation of the assignment. Declaration and statement of authorship: 1. I / we hold a copy of this assignment, which can be produced if the original is lost / damaged. 2. This assignment is my / our original work and no part of it has been copied from any other student’s work or from any other source except where due acknowledgment is made. 3. No part of this assignment has been written for me / us by any other person except where such collaboration has been authorised by the lecturer / teacher concerned and is clearly acknowledged in the assignment. 4. I / we have not previously submitted or currently submitting this work for any other course / unit. 5. This work may be reproduced and / or communicated for the purpose of detecting plagiarism. 6. I/we give permission for a copy of my / our marked work to be retained by the School for review by external examiners. 7. I / we understand that plagiarism is the presentation of the work...
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...Investment has seen extensive growth globally in the past quarter century and numerous studies have attempted to address the question of why firms choose to enter foreign markets via this method. FDI is an important aspect of developing economies with China seeing some of the highest investment rates. The report takes the example of Volkswagen who were the first automobile company to engage in FDI in China and have seen excellent growth there over the years. It has found no one theory can be applied and many elements must be considered when looking at why an individual firm chooses to internationalize through FDI. 2.0 Introduction Foreign Direct Investment (FDI) has become an increasingly important area of study within International Business as rates of investment continue to grow significantly across the globe. FDI is an important aspect of economic growth for a country, in particular in the developing economies. China has been particularly attractive in the past 30 years...
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...Running Head: INTERNATIONAL MARKETING International Expansion at Tesco Introduction Tesco plc is a well-known international grocery and general merchandising retailer. The company headquarter is situated in United Kingdom. Tesco is the fourth-largest retailer in the world on the basis of its revenues subsequent to Wal-Mart, Carrefour and Metro. The company operates with its stores in almost 14 countries throughout Asia, Europe and North America. It is a leader in the UK grocery market with 30% market share (Channer & Hope 2001). The company employs approximately half a million staff worldwide, 250,000 of which are in the UK. It operates with 2,500 stores in the UK. Tesco sells more or less 40,000 food products all over the world and 65% of its sales are attained outside the UK. This evidence, the company high concern with its international operations that will be discussed in this report along with the evaluations of some other international operations related aspects to make some final recommendations. Driving Forces behind Tesco’s Sales outside to UK Retail environment of the world is changing significantly in almost all of its aspects and domains. Nowadays customers does not prefer to purchase different grocery items from different grocery stores as they feel comfortable to purchase it from some retail stores in which every grocery item is present at single place (Burt, Sparks & Teller 2010). Changing customer buying patterns and market trends are the major...
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...In international business theory there are a number of useful models for the external environment analysis of specific countries. These methods can be applied by companies that aim to internationalise and so to define the right location(s) abroad in terms of institutional as well as cultural fit and success opportunities. Correspondingly, concepts like this also provide insightful information for explaining the location choices which organisations have already made. One such framework is the so called Diamond Model introduced by Michael Porter in 1990. This essay tries to determine its advantages and disadvantages as a tool for the examination of firm‟s home and host location decisions by focusing on two major MNEs: the world‟s second-largest high-street retailer –French Carrefour and UK‟s famous Marks & Spencer Porter s Diamond Model(1990: 73) argues that “nation‟s competitiveness depends on the capacity of its industry to innovate and upgrade” and therefore is determined by a nation‟s level of productivity. From an organisational perspective this means that national competitive advantage depends on the nations ability to provide a home base for companies to sustainably improve their products and services in terms of quality, features, technology and so to successfully compete in highly productive industries internationally. Hence, the advantage of the framework is that it identifies four important, interrelated factors that create and illustrate the essential national environment...
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...to Taco Bell’s ideas and image. Our team is pleased to offer the documents entitled ‘Internationalisation of Taco Bell in Malaysia’ as a growth prospect. The report has undertaken all aspects of analyzing the climate for Taco Bell in Malaysia. We have studied the environment and the business strategies to propose a plan that fits the company’s policy and purpose of internationalization. Our team would like to thank you for this opportunity and hope that we have clarified all areas of the proposal. We are grateful for this opportunity and anticipate to working with you in the future. We hope that this proposal will meet your approval. Yours sincerely, Sehr Ali Jafri Table of Contents 1. Executive Summary 3 2. Introduction 3 3. Methodology 3 4. Motives for Internationalisation 4 5. Malaysia Economy Profile 5 5.1 Malaysian Fast-food Business Environment 6 6. Taco Bell’s Global Strategy 6 6.1 Entry Mode 7 7. Conclusion 7 8. Recommendations 7 1. Executive Summary The purpose of this study is to critically analyse the investment opportunities prevalent in the Malaysian market by taking into consideration the significant macroeconomic factors, food industry trends, political environment and other socioeconomic trends that can affect business competitiveness. The idea is to take advantage of the growing Asian market as part of Taco Bell’s internationalisation. The report also presents a valuable insight towards the possible strategies that should...
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...Journal of International Business Studies (2009) 40, 1411–1431 & 2009 Academy of International Business All rights reserved 0047-2506 www.jibs.net The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership Jan Johanson1 and Jan-Erik Vahlne2 1 2 Uppsala University, Uppsala, Sweden; Gothenburg University, Gothenburg, Sweden Correspondence: J Johanson, Uppsala University, PO Box 513, SE-751 20, Uppsala, Sweden. Tel: þ 46 859255215; E-mail: jan.johanson@fek.uu.se Abstract The Uppsala internationalization process model is revisited in the light of changes in business practices and theoretical advances that have been made since 1977. Now the business environment is viewed as a web of relationships, a network, rather than as a neoclassical market with many independent suppliers and customers. Outsidership, in relation to the relevant network, more than psychic distance, is the root of uncertainty. The change mechanisms in the revised model are essentially the same as those in the original version, although we add trust-building and knowledge creation, the latter to recognize the fact that new knowledge is developed in relationships. Journal of International Business Studies (2009), 40, 1411–1431. doi:10.1057/jibs.2009.24 Keywords: internationalization theories and foreign market entry; network relations theory; experiential knowledge; commitment; trust; opportunity Received: 10 July 2007 Revised: 15 October...
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...Norges Handelshøyskole Bergen, Spring 2011 Master Thesis within the main profile of International Business Thesis Advisor: Professor Svein Ulset Title: International Modes of Entry Subtitle: The Case of Disney By, Carlos Gonzalez Hernandez This thesis was written as a part of the master program at NHH. Neither the institution, the supervisor, nor the censors are -through the approval of this thesis- responsible for neither the theories and methods used, nor results and conclusions drawn in this work. International Modes of Entry: The Case of Disney 1 Abstract The case of Disney’s theme parks represents an opportunity to test major internationalisation theories in a setting of large investments with little chance for reversal of commitments. The purpose of the research is to study the benefit of different entry modes dependent on Disney’s Theme Parks value-generating resources and capabilities while conditioned to certain local industrial and institutional conditions in foreign markets. Five major theories and frameworks were used to analyze all four Disney’s ventures abroad. This resulted in 20 individual hypotheses analyzed. Results indicate that Disney followed a predictable internationalisation process in the cases of Tokyo, Hong Kong and Shanghai, but that it went off-path in the Paris one. In successful cases Disney followed a cautious approach, involving local partners to transfer and adapt the “Disney Experience”. In the case of Paris the company decided to enter...
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