Multinational Management Learning Guide

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International Business - the challenges of globalization

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Multinational Management

 

Rationale

A Multinational Corporation (MNC) or multinational enterprise (MNE) or transnational corporation (TNC) or multinational organization (MNO) is a corporation or enterprise that manages production establishments or delivers services in at least two countries.

 

The World's 20 Largest Corporations by Market Value, 2007 ($US millions)

 

Multinational corporations (MNC) are often divided into three broad groups:

Horizontally integrated multinational corporations manage production establishments located in different countries to produce the same or similar products.

Vertically integrated multinational corporations manage production establishment in certain country/countries to produce products that serve as input to its production establishments in other country/countries.

Diversified multinational corporations manage production establishments located in different countries that are neither horizontally or vertically integrated.

Very large multinationals have budgets that exceed those of many countries. Of the 100 largest economies in the world, 51 are multinational corporations.[1] They can have a powerful influence in international relations, given their large economic influence in politicians' representative districts, as well as their extensive financial resources available for public relations and political lobbying.

Multinationals have played an important role in globalization. Given their international reach and mobility, prospective countries, and sometimes regions within countries, must compete with each other to have MNCs locate their facilities (and subsequent tax revenue, employment, and economic activity) within. To compete, countries and regional political districts offer incentives to MNCs such as tax breaks, pledges of governmental assistance or improved infrastructure, or lax environmental and labour standards. This process of becoming more attractive to foreign investment can be characterized as a race to the bottom.

There is a dispute as to which was the first MNC. Some have argued that the Knights Templar, founded in 1118, became a multinational when it stumbled into banking in 1135. However, others claim that the British East India Company or the Dutch East India Company were in fact the first proper multinationals.

There is a dispute as to which was the first MNC. Some have argued that the Knights Templar, founded in 1118, became a multinational when it stumbled into banking in 1135. However, others claim that the British East India Company or the Dutch East India Company were in fact the first proper multinationals.

 

See also

 

External links

 

 

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Learning Contents Tutorials and Lectures Assignments Recommended Texys Readings Learner Support Discussion Forums Workshops Web Cases Case Studies Resources Staff Development Subject Reviews

Introduction: Defining the Multinational Enterprise

Tutorials

 

Readings

In economics, internationalization has been viewed as a process of increasing involvement of enterprises in international markets,[1] although there is no agreed definition of internationalization[2] or international entrepreneurship.[3] There are several internationalization theories which try to explain why there are international activities.

 

 

See also

 

External links

 

Workshop

 

 

The Global Economy

 

Readings

 

Here's Where Hedge Fund Managers Think We Are In The Global Recovery

 

 

The world economy, or global economy, generally refers to the economy, which is based on economies of all of the world's countries, national economies. Also global economy can be seen as the economy of global society and national economies – as economies of local societies, making the global one. It can be evaluated in various kind of ways. For instance, depending on the model used, the valuation that is arrived at can be represented in a certain currency, such as 2006 US dollars or 2005 euros.

It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth. For example, while attempts could be made to calculate the value of currently unexploited mining opportunities in unclaimed territory in Antarctica, the same opportunities on Mars would not be considered a part of the world economy—even if currently exploited in some way—and could be considered of latent value only in the same way as uncreated intellectual property, such as a previously unconceived invention.

Beyond the minimum standard of concerning value in production, use, and exchange on the planet Earth, definitions, representations, models, and valuations of the world economy vary widely.

It is common to limit questions of the world economy exclusively to human economic activity, and the world economy is typically judged in monetary terms, even in cases in which there is no efficient market to help valuate certain goods or services, or in cases in which a lack of independent research or government cooperation makes establishing figures difficult. Typical examples are illegal drugs and other black market goods, which by any standard are a part of the world economy, but for which there is by definition no legal market of any kind.

However, even in cases in which there is a clear and efficient market to establish a monetary value, economists do not typically use the current or official exchange rate to translate the monetary units of this market into a single unit for the world economy, since exchange rates typically do not closely reflect worldwide value, for example in cases where the volume or price of transactions is closely regulated by the government.

Rather, market valuations in a local currency are typically translated to a single monetary unit using the idea of purchasing power. This is the method used below, which is used for estimating worldwide economic activity in terms of real US dollars or euros. However, the world economy can be evaluated and expressed in many more ways. It is unclear, for example, how many of the world's 6.8 billion people have most of their economic activity reflected in these valuations.

In 2011, the largest economies in the world with more than $2 trillion, €1.25 trillion by nominal GDP are the United States, China, Japan, Germany, France, the United Kingdom, Brazil, and Italy. The largest economies in the world with more than $2 trillion, €1.25 trillion by GDP (PPP) are the United States, China, Japan, India, Germany, Russia, the United Kingdom, Brazil, and France.

 

World Economic Outlook

 

External links

 

 

Financial Times, World News
Z Communications
Observer

International Monetary Fund Country Info

Country Info

 

BBC News

 

Reayters Economy News

 

 

 

Theory and History of MNEs

Tutorials

 

Readings

 

The Impact of Multinational Enterprises

 

The future of the Multinational Enterprise

This paper reviews the progress of the research agenda initiated by our book The Future of the Multinational Enterprise (Buckley & Casson, 1976, 2003). It centres on our joint work over the last 30 years, and is in some senses a riposte to Buckley's (2002) question “Is the international business agenda running out of steam?” Its answer is firmly in the negative.

This paper is an attempt to illustrate the efforts of two researchers to progress an agenda that seemed to them to be important. It was, of course, influenced by other researchers (who, we regret, we cannot acknowledge here), but essentially it has retained a unity of purpose and a coherence over time. The pursuance of an independent research agenda has become increasingly difficult since 1976, and readers might want to question just why this should be so.

Buckley and Casson (1976) analysed the multinational enterprise (MNE) within a broad-based intellectual framework based on the pioneering work of Ronald Coase (1937). The book demonstrated how seemingly unrelated aspects of multinational operations, such as technology transfer and international trade in semi-processed products, could be understood using a single concept – the internalisation of imperfect markets.

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Foreign Market Entry

Tutorials

 

Readings

The diamond model is an economical model developed by Michael Porter in his book The Competitive Advantage of Nations,[2] where he published his theory of why particular industries become competitive in particular locations.[3] Afterwards, this model has been expanded by other scholars.

 

The Porter diamond

 

Foreign direct investment (FDI) is defined as "investment made to acquire lasting interest in enterprises operating outside of the economy of the investor." [1] The FDI relationship consists of a parent enterprise and a foreign affiliate which together form a Multinational corporation (MNC). In order to qualify as FDI the investment must afford the parent enterprise control over its foreign affiliate. The UN defines control in this case as owning 10% or more of the ordinary shares or voting power of an incorporated firm or its equivalent for an unincorporated firm; lower ownership shares are known as portfolio investment.

 

 

FDI decline 'not cause for concern'

 

 

2000 Foreign Direct Investment

 

 

See also

 

External links

 

 

International Competition and the Multinational Enterprise

Tutorials

 

Readings

In economics, the law of comparative advantage refers to the ability of a person or a country to produce a particular good or service at a lower marginal and opportunity cost. Even if one country is more efficient in the production of all goods (absolute advantage) than the other, both countries will still gain by trading with each other, as long as they have different relative efficiencies.[1][2][3]

 

Comparative advantage and the gains from trade

 

For example, if, using machinery, a worker in one country can produce both shoes and shirts at 6 per hour, and a worker in a country with less machinery can produce either 2 shoes or 4 shirts in an hour, each country can gain from trade because their internal trade-offs between shoes and shirts are different. The less-efficient country has a comparative advantage in shirts, so it finds it more efficient to produce shirts and trade them to the more-efficient country for shoes. Without trade, its opportunity cost per shoe was 2 shirts; by trading, its cost per shoe can reduce to as low as 1 shirt depending on how much trade occurs (since the more-efficient country has a 1:1 trade-off). The more-efficient country has a comparative advantage in shoes, so it can gain in efficiency by moving some workers from shirt-production to shoe-production and trading some shoes for shirts. Without trade, its cost to make a shirt was 1 shoe; by trading, its cost per shirt can go as low as 1/2 shoe depending on how much trade occurs.

The net benefits to each country are called the gains from trade.

 

Relatively Good Isn't Good Enough.

 

 

See also

 

Absolute advantage

 

 

External links

 

 

International Competition Law

 

ALFA Video Library

 

Competition law encompasses any laws or regulations directed toward creating or maintaining a competitive market environment.

This site is broken into a number of different categories:

International Resources includes links to organisations and resources which encompass more than one domestic competition law regime. This includes links to bodies such as the International Competition Network, international agreements or recommendations such as those created by the OECD, and other reports or online publications dealing with international dimensions of competition policy.

National Resourcesprovides general links to domestic competition resources, including regulators, case and legislation repositories and research institutes.

Theory contains discussion about the leading theoretical justifications for competition laws and links to relevant resources.

Laws and Regulations contains discussion of the key substantive areas regulated by competition law and policy, including merger law and regulations, cartels, exclusive dealing, resale price maintenance and misuse of market power or monopolisation. It also contains links to laws and resources relating to these areas for a variety of jurisdictions.

Extraterritoriality contains discussion of the extent to which competition laws are applied extraterritorially

Publications contains links to online publications, including articles and reports, relating to international competition law issues (where relevant they are also included in the targetted law and regulation/penalty or theory pages.

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Click a region on the map to find the country you are interested in.

Global Competition Forum Middle East and Asia Europe North and Central America Soth America Africa Oceania

 

Multinational Strategy

Tutorials

 

Readings

A Strategic Alliance is a relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations. This form of cooperation lies between M&A and organic growth.

Partners may provide the strategic alliance with resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property. The alliance is a cooperation or collaboration which aims for a synergy where each partner hopes that the benefits from the alliance will be greater than those from individual efforts. The alliance often involves technology transfer (access to knowledge and expertise), economic specialization,[1] shared expenses and shared risk.

 

 

 The Global Small Business

 

External links

Association of Strategic Alliance Professionals, Inc. Professional organization that serves those who manage strategic alliances and corporate partnerships.

SMART- Strategic Merger & Alliance Resource Training program Metropolitan Detroit program assisting nonprofit organizations with the strategic alliance process.

Example of Strategic Alliance program Example of strategic Alliance program with Oracle and Unisys.

Example of coaching approach to cooperations smE-MPOWER approach for coaching the formation of strategic alliances developed within a European Union funded public project. Resulting international network of cooperation coaches as a learning community.

International alliances

Local Selves, Global Other: A Philosophical Critique of Global Strategic Management

Analysis: The age of 'strategic alliances' - Higher Education

 

Footnotes

 

Workshop


Organisation

Tutorials

 

Readings

Developing a Corporate Learning Strategy

 

Knowledge Workers and Corporate Learning Environments

 

Could your organization and its people derive more benefit from training and development? Does your training meet personal and professional development requirements and contribute to key business objectives such as winning new business? If all existing courses were closed down would customers notice or care?

Now is a good time to ask such questions. Training and development are at a watershed. Many existing courses and facilities are coming to the end of their useful lives. There are new approaches to learning and knowledge management to consider, emerging technologies to evaluate, and collaborative opportunities to assess.

Those responsible for corporate learning face tough choices and multiple challenges. Should a corporate university offer formal qualifications? How might a corporate intranet best be used? Could business development and the processes of value and knowledge creation be better supported? Should resources devoted to e-learning courses which people ignore or find boring be used for more productive purposes?

Certain options go to the heart of many current operations. Should training and development be made a revenue centre or a distinct business? Could particular activities, or the whole function, be outsourced? What would be lost if ‘central training’ were closed down?

Read More ...

 

 

Ethnologue

 

 


Processes and People

Tutorials

 

Readings

Knowledge society

As access to electronic information resources increased at the beginning of the 21st century, special attention was extended from the information society to the knowledge society. An analysis by the Irish government stated, "The capacity to manipulate, store and transmit large quantities of information cheaply has increased at a staggering rate over recent years. The digitisation of information and the associated pervasiveness of the Internet are facilitating a new intensity in the application of knowledge to economic activity, to the extent that it has become the predominant factor in the creation of wealth. As much as 70 to 80 percent of economic growth is now said to be due to new and better knowledge."[10]

 

A Model of a Knowledge Society

The Second World Summit on the Knowledge Society, held in Chania, Crete, in September 2009, gave special attention to the following topics:[11]

 

 

Governments, Governance and Ethics

Tutorials

 

Readings

A multinational corporation (MNC) or multinational enterprise (MNE)[1] is a corporation enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation. The International Labour Organization (ILO) has defined an MNC as a corporation that has its management headquarters in one country, known as the home country, and operates in several other countries, known as host countries.

 

Enterprise and Government

 

People Federation of International Justice

Some multinational corporations are very big, with budgets that exceed some nations' gross domestic products (GDPs). Multinational corporations can have a powerful influence in local economies, and even the world economy, and play an important role in international relations and globalization.

 

See also

 

External links

Data on transnational corporations

CorpWatch

UNCTAD publications on multinational corporations

UNCTAD—Lists of largest TNCs

ILO—Multinational Corporations

List of multinational companies

[1]

[Harvey Schachter, Adapting for success on foreign shores. The Global Mail. November 2009.

Gary M. Stern, Taking The Bite Out Of Moving Overseas U.S. players span culture gaps in foreign markets. Investor’s Business Daily, January 11, 2010. [2]

 

Corporate governance is "the system by which companies are directed and controlled" (Cadbury Committee, 1992). It involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders; it deals with prevention or mitigation of the conflict of interests of stakeholders.[1] Ways of mitigating or preventing these conflicts of interests include the processes, customs, policies, laws, and institutions which have impact on the way a company is controlled.[2][3] An important theme of corporate governance is the nature and extent of accountability of people in the business, and mechanisms that try to decrease the principal–agent problem.[4]

 

Corporate Governance

 

Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed.[5][6] In contemporary business corporations, the main external stakeholder groups are shareholders, debtholders, trade creditors, suppliers, customers and communities affected by the corporation's activities. Internal stakeholders are the board of directors, executives, and other employees. It guarantees that an enterprise is directed and controlled in a responsible, professional, and transparent manner with the purpose of safeguarding its long-term success. It is intended to increase the confidence of shareholders and capital-market investors. [7]

A related but separate thread of discussions focuses on the impact of a corporate governance system on economic efficiency, with a strong emphasis on shareholders' welfare; this aspect is particularly present in contemporary public debates and developments in regulatory policy (see regulation and policy regulation).[8]

There has been renewed interest in the corporate governance practices of modern corporations since 2001, particularly due to the high-profile collapses of a number of large corporations, most of which involved accounting fraud. Corporate scandals of various forms have maintained public and political interest in the regulation of corporate governance. In the U.S., these include Enron Corporation and MCI Inc. (formerly WorldCom). Their demise is associated with the U.S. federal government passing the Sarbanes-Oxley Act in 2002, intending to restore public confidence in corporate governance. Comparable failures in Australia (HIH, One.Tel) are associated with the eventual passage of the CLERP 9 reforms. Similar corporate failures in other countries stimulated increased regulatory interest (e.g., Parmalat in Italy).

 

See also

 

External links

 

 

 

 

 

Major Multinationals. Conclusion: the Prospects for MNEs

Tutorials

 

Readings

 


Major Multinational Companies

 

 

Case Studies

 

 

Recommended Texts

 

Multinational Management

Multinational Management
John B. Cullen, Washington State University

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Global Business Today

 

Global Business Today

Charles Hill’s Global Business Today, 3e (GBT) has become an established text in the International Business market for its excellent, but concise coverage of the key global issues including the cultural context for global business, cross-border trade and investment, the global monetary system and competition in the global environment. GBT’s concise chapters give a general introduction to international business – emphasizing the environmental factors, with less coverage of operations. Charles Hill is renowned for his attention to research trends and that is evident in Global Business Today, 3e through a variety of real world examples and cases from small, medium, and large companies throughout the world.

Check the availability and buy your books from our Bookshop.

 
International Business

International Business
By: Charles Hill

Market-defining since it was first introduced, International Business, 4e by Charles W. L. Hill, continues to set the standard for international business textbooks. Charles Hill’s reputation as a leading thinker and actor in the international arena precede him, and he is regularly asked to explain world economic events on National Public Radio. His expertise lends itself to a book that is thorough and up-to-date. Because many issues in international business are complex, they necessitate exploration of pros and cons of economic theories, government policies, business strategies, organizational structures, etc. The author challenges the often shallow explanations that other books offer, while maintaining a tight integrated flow between the chapters. Hill’s book is practical in nature, focusing on managerial implications of each topic on the actual practice of international business. The author’s passion and enthusiasm for the international business arena is apparent on every page as he strives to make important theories interesting, informative, and accessible to all students.

Check the availability and buy your books from our Bookshop.

 

 

Resources

 

World Today

 

 

 

 

 

Links

·         http://www.theodora.com/flags.html (concise information about countries)

·         http://www.elite.net/~runner/jennifers/language.htm (language / translations)

·         http://www.travlang.com/languages/ language / translations, currency conversions, etc (

·         http://users.owt.com/rpeto/geo/cultures.html (more in-depth information on culture)

·         http://www.getcustoms.com/omnibus.html (insight into culture and customs around the world)

·         http://www.getcustoms.com/omnibus/iw-arts.html (Global business culture basics)

·         http://www.webofculture.com/ (gestures, time zones, misc.)

·         http://www.escapeartist.com/global/reference.htm (resources for expatriate managers/workers)

 

WTO

 

globalEDGE