Globalization and the Multinational Enterprise
Globalization and the MNE.
has become very widely used in recent
years. How would you define it?
Narayana Murthy’s quote is a good place to start any discussion of globalization:
“I define globalization as producing where it is most cost-effective, selling where it is most
profitable, and sourcing capital where it is cheapest, without worrying about national
Narayana Murthy, President and CEO, Infosys
Globalization and Value Creation.
What does an MNE need in order for it to create value
through the globalization process?
Global business, like any business, is the social science of managing people to organize, maintain,
and grow the collective productivity toward accomplishing productive goals, typically to generate
profit and value for its owners and stakeholders. A multinational enterprise (MNE) needs three
fundamental elements in order to build firm value: (1) an
(2) high quality
access to capital
Value Creation and the Concept of Capitalism.
How does the concept of
apply to the globalization process of a business, as it moves from elemental to multinational stages
Open markets and insightful leadership is all for nought if the MNE cannot gain ready access to
affordable capital. It is
that allows the investment needed to obtain the technology, execute
the strategy, and expand across global markets. It is the “capital” in
it is the ability of
the enterprise to reach out and obtain resources from outside of the firm to pursue the firm’s vision
and create the value for all of the key stakeholders in the enterprise itself, and subsequently for the
community and society of which it is an integral element.
Theory of Comparative Advantage.
Define and explain the theory of comparative advantage.
theory of comparative advantage
provides a basis for explaining and justifying international
trade in a model world assumed to enjoy free trade, perfect competition, no uncertainty, costless
information, and no government interference. The theory contains the following features:
Exporters in Country A sell goods or services to unrelated importers in Country B.
Firms in Country A specialize in making products that can be produced relatively efficiently,
given Country A’s endowment of factors of production: that is, land, labor, capital, and