12 Globalisation and Multinational Corporations
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12Globalisation and
Multinational Corporations
12Globalisation and
Multinational Corporations
Multinational CorporationsMultinational Corporations
Diversity among MNCs size
the comparative size of MNCs and countries' GDP
Diversity among MNCs size
the comparative size of MNCs and countries' GDP
Comparison of the 10 largest multinational corporations(by gross revenue) and selected countries (by GDP): 2002
Comparison of the 10 largest multinational corporations(by gross revenue) and selected countries (by GDP): 2002
Multinational CorporationsMultinational Corporations
Diversity among MNCs size the nature of the business
Diversity among MNCs size the nature of the business
Multinational CorporationsMultinational Corporations
Diversity among MNCs size the nature of the business overseas business relative to total business
Diversity among MNCs size the nature of the business overseas business relative to total business
Multinational CorporationsMultinational Corporations
Diversity among MNCs size the nature of the business overseas business relative to total business production locations
Diversity among MNCs size the nature of the business overseas business relative to total business production locations
Multinational CorporationsMultinational Corporations
Diversity among MNCs size the nature of the business overseas business relative to total business production locations ownership patterns
Diversity among MNCs size the nature of the business overseas business relative to total business production locations ownership patterns
Multinational CorporationsMultinational Corporations
Diversity among MNCs size the nature of the business overseas business relative to total business production locations ownership patterns organisational structure
Diversity among MNCs size the nature of the business overseas business relative to total business production locations ownership patterns organisational structure
Multinational CorporationsMultinational Corporations
Diversity among MNCs size the nature of the business overseas business relative to total business production locations ownership patterns organisational structure
Trends in multinational investment
Diversity among MNCs size the nature of the business overseas business relative to total business production locations ownership patterns organisational structure
Trends in multinational investment
Multinational CorporationsMultinational Corporations
Diversity among MNCs size the nature of the business overseas business relative to total business production locations ownership patterns organisational structure
Trends in multinational investment the growth and geography of FDI
Diversity among MNCs size the nature of the business overseas business relative to total business production locations ownership patterns organisational structure
Trends in multinational investment the growth and geography of FDI
0
5
10
15
20
25
1985 1990 1995 2000
FDI inflows (% of gross fixed capital formation)FDI inflows (% of gross fixed capital formation)F
DI
as %
of
gros
s fix
ed c
apita
l for
mat
ion
0
5
10
15
20
25
1985 1990 1995 2000
FDI inflows (% of gross fixed capital formation)FDI inflows (% of gross fixed capital formation)F
DI
as %
of
gros
s fix
ed c
apita
l for
mat
ion
Advanced countries
0
5
10
15
20
25
1985 1990 1995 2000
FDI inflows (% of gross fixed capital formation)FDI inflows (% of gross fixed capital formation)F
DI
as %
of
gros
s fix
ed c
apita
l for
mat
ion
Advanced countries
Developing countries
Multinational CorporationsMultinational Corporations
Diversity among MNCs size the nature of the business overseas business relative to total business production locations ownership patterns organisational structure
Trends in multinational investment the growth and geography of FDI FDI and the UK
Diversity among MNCs size the nature of the business overseas business relative to total business production locations ownership patterns organisational structure
Trends in multinational investment the growth and geography of FDI FDI and the UK
0
50
100
150
200
250
1986 1988 1990 1992 1994 1996 1998 2000 2002
$ bi
llion
Direct investment into and out of the UKDirect investment into and out of the UK
0
50
100
150
200
250
1986 1988 1990 1992 1994 1996 1998 2000 2002
$ bi
llion
Inwardinvestment
Direct investment into and out of the UKDirect investment into and out of the UK
0
50
100
150
200
250
1986 1988 1990 1992 1994 1996 1998 2000 2002
$ bi
llion
Outwardinvestment
Inwardinvestment
Direct investment into and out of the UKDirect investment into and out of the UK
Types of multinational expansion horizontally integrated multinational vertically integrated multinational conglomerate
Going global to reduce costs international differences in input prices international differences in productivity
labour skillsentrepreneurial and managerial skills learning by doing
low-cost access to local markets economies of scale taking advantage of government policies
Types of multinational expansion horizontally integrated multinational vertically integrated multinational conglomerate
Going global to reduce costs international differences in input prices international differences in productivity
labour skillsentrepreneurial and managerial skills learning by doing
low-cost access to local markets economies of scale taking advantage of government policies
Business Strategy in a Global EconomyBusiness Strategy in a Global Economy
Going global to access new markets increased demand
spreading risks
can exploit advantages over local firmsownership of superior technology
entrepreneurial and managerial skills
R&D capacity
access to local technology
learning from experience in diverse markets
Going global to access new markets increased demand
spreading risks
can exploit advantages over local firmsownership of superior technology
entrepreneurial and managerial skills
R&D capacity
access to local technology
learning from experience in diverse markets
Business Strategy in a Global EconomyBusiness Strategy in a Global Economy
The product life cycle and the MNC the launch phase
multinational spread likely to be limited the growth phase
MNC likely to shift production abroad in order to retain cost competitiveness
maturityMNC increasingly seeks markets abroad as
growth in home market slows late maturity and decline
MNC increasingly seeks both markets and ever lower cost production abroad
The product life cycle and the MNC the launch phase
multinational spread likely to be limited the growth phase
MNC likely to shift production abroad in order to retain cost competitiveness
maturityMNC increasingly seeks markets abroad as
growth in home market slows late maturity and decline
MNC increasingly seeks both markets and ever lower cost production abroad
Business Strategy in a Global EconomyBusiness Strategy in a Global Economy
Problems facing multinationals language barriers selling and marketing
cultural issues relations with host governments relationships between subsidiaries
possible diseconomies of scaleeasier if subsidiaries are run independently
The global strategy trade-off economies of scale of standardisation or
higher costs of customisation?determinants of trade-off
Problems facing multinationals language barriers selling and marketing
cultural issues relations with host governments relationships between subsidiaries
possible diseconomies of scaleeasier if subsidiaries are run independently
The global strategy trade-off economies of scale of standardisation or
higher costs of customisation?determinants of trade-off
Problems Facing MultinationalsProblems Facing Multinationals
MNC Investment and the Host StateMNC Investment and the Host State
Advantages of MNC investment employment balance of payments technology transfer tax revenues
Disadvantages uncertainty power and control by the MNC over the host transfer pricing the environment
Advantages of MNC investment employment balance of payments technology transfer tax revenues
Disadvantages uncertainty power and control by the MNC over the host transfer pricing the environment
Is Globalisation a 'Good Thing'?Is Globalisation a 'Good Thing'?
The benefits of globalisation benefits of trade benefits of increased FDI competition reduces costs and encourages
innovation faster spread of technology political and social ties
The costs can exacerbate inequality erodes national cultures environmental costs domination by MNCs
The benefits of globalisation benefits of trade benefits of increased FDI competition reduces costs and encourages
innovation faster spread of technology political and social ties
The costs can exacerbate inequality erodes national cultures environmental costs domination by MNCs
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