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Global Business Summary all

Global Business Summary all - Global Business Summary...

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Global Business Summary Chapter 1: Expanding Abroad Motivations, Means and Mentalities Change: world-wide operations Access to new markets & low-cost resources New sources of information and knowledge New strategic moves in competing with domestic and international rivals Vehicle of internationalization = MULTINATIONAL ENTERPRISE (MNE) Definition of MNE: Substantial direct investment in foreign countries, not just import-export relationships Active management of offshore assets rather than passive investment portfolio Developed only in the post WW II years UN definition: a) comprising entities in two or more countries , regardless of legal form & fields of activity; b) system of decisions under coherent policies and common strategy through one or more decision-making centers; c) linked by ownership or otherwise able to execute significant influence over activities of others, share knowledge, resources and responsibilities active, coordinated management of operations located in different countries Traditional Motivations: Secure key supplies Market seeking behavior (e.g. home market too small, brand recognition, technology) Access to low-cost factors (low-cost capital, labor) Pre-MNE stage: export unit within the home office oversee growing export levels; next stage: standardized, important part of revenues Emerging Motivations: Economies of scale, ballooning R&D investments, shorter product life cycles Global scanning and learning capability (market opportunities new technologies or market needs innovative product development) Competitive positioning: e.g. cross-subsidization subsidize one market drive out competitors with profits from other markets) GLOBAL CHESS Prerequisites for Internationalization: Location specific advantages = MOTIVATION Familiarity with national culture, industry structure, government requirements, etc. natural advantage (existing relationships with suppliers, governments) STRATEGIC COMPETENCIES: Advanced technologies, knowledge/ skills or economies of scale in R&D does not succeed without distinctive competency to overcome liability of foreigness
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ORGANIZATIONAL CAPABILITIES to leverage strategic assets more effectively through own subsidiaries than contractual relations with outside parties (licensing, franchising) Process of Internationalization: Uppsala model: company makes initial commitment of resources to foreign market gains local market knowledge better evaluation of its current activities subsequent commitment (e.g. buying local distributor or plant) necessary local capability & market knowledge ( assimilation of local market knowledge) But: some companies also invest in local partners as a short-cut Also important: level of market commitment vs. level of control needed (low-low = export; high- high = joint venture, highest-highest = own subsidiary) International Mentality: Earliest stages of internationalization
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  • Spring '16
  • BrianHilton
  • Globalization, Corporation, local market knowledge

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