Chapter 1 Introduction: Multinational Enterprise and Multinational Financial Management

PART I. THE RISE OF INTER-MODAL INTERNATIONAL TRADE A. GLOBALIZATION IS: T. Koulopoulos in “Smartsourcing” Evolution Survival A necessary counterbalance to the power of disruption from civilization’s networks

GLOBALIZATION B. Globalization creates: Mutual reliance Security Tolerance Prosperity Greater access to economic resources

Containerization C. THE REVOLUTION IN WORLD TRADE AND FINANCE (1985) a. Containers (20’ (TEU) and 40’) b. Make Inter-modal transport possible

International Finance is about Risk Mitigation aka Risk Engineering

This New Method of Shipping Has Revolutionized Global Trade and Finance

CARGO CRUSH 7.5 NO. 1 LA 7.3 6.7 NO. 2 Long B 5.8 = 2005 4.8 NO. 3 NY/NJ 4.5 = 2004 Source: L.A. Times, C-1, 2/4/2006 - IN MILLIONS OF TWENTY FOOT CONTAINERS (TEUs)

World’s Top 5 Container Ports Millions of Twenty Foot Containers Source: L.A. Times C-1, 2/22/2006

The Third Largest Port in the World The largest in North America Los Angeles The Third Largest Port in the World The largest in North America

Port of Long Beach                                                                                                                         

A Containerized Port in China

                                                                    

                                                                    

                                                                    

Containerized Shipping is Intermodal By rail mode By ground mode By air mode

A “Small” Container Ship

The Largest Shipping Company http://www.maersksealand.com/

The Alameda Corridor

Intermodal Transport

Voyages to Hong Kong on Hanjin The Time Length Of Global Shipping Voyages to Hong Kong on Hanjin From Departure Arrival Transit Service Vessel Long Beach Tue Sep 25 Sat Oct 13 18 days AWEPD Priwall New York Metro Mon Sep 17 Tue Oct 16 29 days AWE Lt Genova Oakland Tue Oct 2 Wed Oct 17 15 days PSPD1 H.J. Athens Le Havre Thu Sep 27 20 days CEX H.J. Savannah Fri Oct 5 Fri Oct 19 14 days PSPD2 Portugal Senator Fri Sep 28 21 days PDA H.J. Amsterdam Sat Oct 20 German Senator

PART II. THE RISE OF THE MULTINATIONAL CORPORATION II. What is an MNC? A. Definition: a company with production and distribution facilities in more than one country.

THE RISE OF THE MULTINATIONAL CORPORATION B. EVOLUTION OF THE MNC Reasons to Go Global: 1. raw materials 2. more markets 3. minimize costs of production Historical Time

THE RISE OF THE MULTINATIONAL CORPORATION 1. RAW MATERIAL SEEKERS exploit markets in other countries historically first to appear modern-day counterparts: Anaconda Copper Exxon-Mobil

THE RISE OF THE MULTINATIONAL CORPORATION 2. MARKET SEEKERS produce and sell in foreign markets heavy foreign direct investors representative firms: IBM Nestle Levi Strauss

THE RISE OF THE MULTINATIONAL CORPORATION 3. COST MINIMIZERS seek lower-cost production abroad motive: to remain cost competitive and maintain profits. representative firms: Texas Instruments Motorola

THE RISE OF THE MULTINATIONAL CORPORATION SUPER ADVANTAGES OF THE MNC 3 ARBITRAGE POWERS TAX FINANCIAL REGULATORY

What is a Global Corporation? “Think locally but act locally”

LOGISTICS RISK

THE PORT OF LOS ANGELES

THE PORT OF LOS ANGELES

THE PORT OF LOS ANGELES