Business strategy in global economy

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Business strategy in global economy

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  • Business strategy in global economy

    1. 1. 12 Globalisation and Multinational Corporations
    2. 2. Multinational Corporations Diversity among MNCs size the comparative size of MNCs and countries' GDP
    3. 3. Comparison of the 10 largest multinational corporations (by gross revenue) and selected countries (by GDP): 2002
    4. 4. Comparison of the 10 largest multinational corporations (by gross revenue) and selected countries (by GDP): 2002
    5. 5. Multinational Corporations Diversity among MNCs size the nature of the business
    6. 6. Multinational Corporations Diversity among MNCs size the nature of the business overseas business relative to total business
    7. 7. Multinational Corporations Diversity among MNCs size the nature of the business overseas business relative to total business production locations
    8. 8. Multinational Corporations Diversity among MNCs size the nature of the business overseas business relative to total business production locations ownership patterns
    9. 9. Multinational Corporations Diversity among MNCs size the nature of the business overseas business relative to total business production locations ownership patterns organisational structure
    10. 10. Multinational 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
    11. 11. Multinational 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
    12. 12. 0 5 10 15 20 25 1985 1990 1995 2000 FDI inflows (% of gross fixed capital formation)FDIas%ofgrossfixedcapitalformation
    13. 13. 0 5 10 15 20 25 1985 1990 1995 2000 FDI inflows (% of gross fixed capital formation)FDIas%ofgrossfixedcapitalformation Advanced countries
    14. 14. 0 5 10 15 20 25 1985 1990 1995 2000 FDI inflows (% of gross fixed capital formation)FDIas%ofgrossfixedcapitalformation Advanced countries Developing countries
    15. 15. Multinational 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
    16. 16. 0 50 100 150 200 250 1986 1988 1990 1992 1994 1996 1998 2000 2002 $billion Direct investment into and out of the UK
    17. 17. 0 50 100 150 200 250 1986 1988 1990 1992 1994 1996 1998 2000 2002 $billion Inward investment Direct investment into and out of the UK
    18. 18. 0 50 100 150 200 250 1986 1988 1990 1992 1994 1996 1998 2000 2002 $billion Outward investment Inward investment Direct investment into and out of the UK
    19. 19. 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 skills entrepreneurial 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 Economy
    20. 20. Going global to access new markets increased demand spreading risks can exploit advantages over local firms ownership 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 Economy
    21. 21. 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 maturity MNC 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 Economy
    22. 22. Problems facing multinationals language barriers selling and marketing cultural issues relations with host governments relationships between subsidiaries possible diseconomies of scale easier 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
    23. 23. MNC 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
    24. 24. 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

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