MNC's October 23 Week

MNC's October 23 Week - MNCs o Transaction costs o Tacit...

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Definitions: Home economy: where the MNC starts Host economy: where it goes to invest Greenfield: build a new factory/ firm Portfolio investment: equities, bonds, but no control FDI: gives you control Joint venture, shared ownership, control Strategic alliance: shared facility Horizontal network: same kind of production in different countries Vertical Network: component production and final assembly in different countries Why do MNC’s exist? No: cost of being foreign competitive failure o Export, license, partner, live in local market No, but politics MNC’s o Import barriers, exchange controls etc. Yes, various forms of market failure
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Unformatted text preview: MNCs o Transaction costs o Tacit knowledge o Asset specificity o Oligopolistic rent seeking Yes, sociological or individual factors: managers want firms to expandthey get more perks and power (influence) OLI Model for FDI 1. Ownership specific advantages of TNC control 2. Location specific advantages of Host 3. Advantages of Internalization a. IF: only #1 then licensing, exportsm etc. . 4 Types of of MNCs Internationalization (mostly raw materials shallow, mostly horizontal GCC) Multinationalization (local market manufacturingshallow, horizontal, no GCC) Transnationalization (glocal manufacturing vertical GCCs)...
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This document was uploaded on 10/26/2011 for the course PLIR 2050 at UVA.

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