Objectives:
• Define multinational enterprise (MNE)
• Identify various operations modes in internationalisation
• Understand the changing global environment- Chapters 1 and 11
Implications of the increasing presence of Multinationals: easy to change the world
What is Multinational Enterprise (transnational)?
Any business that have productive activities in 2 or more countries Research, marketing, manufacture Broader definition: any firm that engages in international trade and investment
Multinationals are rootless cosmopolitans (- more of a mindset or mentalit?
Headquarters- represents the distribution of the world economy.
Reasons to become international
Decisions, risks that come with it
Significance of multinational corporation:
Not all MNE are equal:
United Nations trans nationality index – measure of multinational-ness
• Size/resources
• Geographical scope/ diversification
• Experience: process of internationalisation management attitude and structure
• Degree of control over foreign operaitons
• Total sales/assets and employment
Single macro-environment- more countries added to equation = different kinds of environemtns that are made up of the elements
Different countries varies- understanding
Interface of different countries
Role of MNE
• Provide standard products
• Facilitates the convergence of consumer tastes: eg Apple
• Main actor of global production
• Facilitates global trade of intermediate and finished goods (between subsidiaries and between headquarters and subsidiaries)
• Influence local players and firms (supplier, distributors, employees) with global standard and value
Becoming MNE:
Expansion strategy
Gradual process sequential process (slower process, ikea)
There is a decline in the domestic market
Internationalisation is an evolutionary process over time as firms expand their geographical reach and mindsets.
MODES OF OPERATONS:
• There is a range of international business operations, i.e. means of servicing foreign markets, which firms may choose.
• Firms often use multiple modes simultaneously.
• The choice of a particular mode depends on the firm and market characteristics (i.e. internal/external conditions).
•
Inward (servicing domestic customers through transactions with foreign firms) vs outward (servicing customers in foreign markets). 