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G&P - Chapter 9 - Multi-National Business
 

G&P - Chapter 9 - Multi-National Business

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    G&P - Chapter 9 - Multi-National Business G&P - Chapter 9 - Multi-National Business Presentation Transcript

    • Global Finance and Business
      CHAPTER NINE
      International Relations 9/e
      Goldstein and Pevehouse
      Pearson Education, Inc.
      publishing as Longman © 2010
    • Multinational Business
      Although states are the main rule makers for currency exchange and other international economic transactions, these are carried out mainly by private firms and individuals, not governments.
      Most important among these are multinational corporations (MNCs).
      Pearson Education, Inc.
      publishing as Longman © 2010
    • Multinational Corporations
      Companies based in one state with affiliated branches or subsidiaries operating in other states
      Most important: industrial corporations
      Automobile, oil, and electronics
      Usually based in G8 states
      Financial corporations
      Service corporations
      McDonald’s
      AT&T
      Pros and cons
      Pearson Education, Inc.
      publishing as Longman © 2010
    • Foreign Direct Investment
      MNCs do not just operate in foreign countries; they also own capital (standing wealth) there.
      U.S. and German MNCs own some of the capital located in Japan.
      Japanese MNCs own capital located in the United States and Germany.
      Direct foreign investment involves tangible goods such as factories and office buildings.
      Role of foreign investment
      Pros and cons
      Pearson Education, Inc.
      publishing as Longman © 2010
    • Figure 9.2
      Pearson Education, Inc.
      publishing as Longman © 2010
    • Host and Home Government Relations
      A state in which a foreign MNC operates is called the host country.
      The state where the MNC has its headquarters is called its home country.
      Pearson Education, Inc.
      publishing as Longman © 2010
    • Host and Home Government Relations
      Conflicts may arise
      Distribution of new wealth
      Incentives
      Breaking agreements
      Nationalization
      Trade regulations
      Ex: NAFTA
      Monetary policy
      Issues of international security
      Corruption
      • In general, an MNC cannot operate in a state against the wishes of its government.
      • In theory, an MNC operates in host countries only when it is in the interests of both the MNC and the host government.
      Pearson Education, Inc.
      publishing as Longman © 2010
    • Host and Home Government Relations
      Conflicts with home governments
      Taxation
      Trade policies
      Security
      Occasionally, MNCs can get their home governments to provide security when host governments fail to do so.
      Need for stable international security
      Corporate alliances: Impact on liberalism rather than economic nationalism
      Interests more intertwined
      Pearson Education, Inc.
      publishing as Longman © 2010