12 Globalisation and Multinational Corporations 12 Globalisation and Multinational Corporations

Multinational Corporations n Diversity among MNCs < size F the comparative size of MNCs and countries' GDP n Diversity among MNCs < size F 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 Corporations n Diversity among MNCs < size < the nature of the business n Diversity among MNCs < size < the nature of the business

Multinational Corporations n Diversity among MNCs < size < the nature of the business < overseas business relative to total business n Diversity among MNCs < size < the nature of the business < overseas business relative to total business

Multinational Corporations n Diversity among MNCs < size < the nature of the business < overseas business relative to total business < production locations n Diversity among MNCs < size < the nature of the business < overseas business relative to total business < production locations

Multinational Corporations n Diversity among MNCs < size < the nature of the business < overseas business relative to total business < production locations < ownership patterns n Diversity among MNCs < size < the nature of the business < overseas business relative to total business < production locations < ownership patterns

Multinational Corporations n Diversity among MNCs < size < the nature of the business < overseas business relative to total business < production locations < ownership patterns < organisational structure n Diversity among MNCs < size < the nature of the business < overseas business relative to total business < production locations < ownership patterns < organisational structure

Multinational Corporations n Diversity among MNCs < size < the nature of the business < overseas business relative to total business < production locations < ownership patterns < organisational structure n Trends in multinational investment n Diversity among MNCs < size < the nature of the business < overseas business relative to total business < production locations < ownership patterns < organisational structure n Trends in multinational investment

Multinational Corporations n Diversity among MNCs < size < the nature of the business < overseas business relative to total business < production locations < ownership patterns < organisational structure n Trends in multinational investment < the growth and geography of FDI n Diversity among MNCs < size < the nature of the business < overseas business relative to total business < production locations < ownership patterns < organisational structure n Trends in multinational investment < the growth and geography of FDI

FDI inflows (% of gross fixed capital formation) FDI as % of gross fixed capital formation

FDI inflows (% of gross fixed capital formation) FDI as % of gross fixed capital formation Advanced countries

FDI inflows (% of gross fixed capital formation) FDI as % of gross fixed capital formation Advanced countries Developing countries

Multinational Corporations n Diversity among MNCs < size < the nature of the business < overseas business relative to total business < production locations < ownership patterns < organisational structure n Trends in multinational investment < the growth and geography of FDI < FDI and the UK n Diversity among MNCs < size < the nature of the business < overseas business relative to total business < production locations < ownership patterns < organisational structure n Trends in multinational investment < the growth and geography of FDI < FDI and the UK

Direct investment into and out of the UK

Inward investment Direct investment into and out of the UK

Outward investment Inward investment Direct investment into and out of the UK

n Types of multinational expansion < horizontally integrated multinational < vertically integrated multinational < conglomerate n Going global to reduce costs < international differences in input prices < international differences in productivity F labour skills F entrepreneurial and managerial skills F learning by doing < low-cost access to local markets < economies of scale < taking advantage of government policies n Types of multinational expansion < horizontally integrated multinational < vertically integrated multinational < conglomerate n Going global to reduce costs < international differences in input prices < international differences in productivity F labour skills F entrepreneurial and managerial skills F learning by doing < low-cost access to local markets < economies of scale < taking advantage of government policies Business Strategy in a Global Economy

n Going global to access new markets < increased demand < spreading risks < can exploit advantages over local firms F ownership of superior technology F entrepreneurial and managerial skills F R&D capacity < access to local technology < learning from experience in diverse markets n Going global to access new markets < increased demand < spreading risks < can exploit advantages over local firms F ownership of superior technology F entrepreneurial and managerial skills F R&D capacity < access to local technology < learning from experience in diverse markets Business Strategy in a Global Economy

n The product life cycle and the MNC < the launch phase F multinational spread likely to be limited < the growth phase F MNC likely to shift production abroad in order to retain cost competitiveness < maturity F MNC increasingly seeks markets abroad as growth in home market slows < late maturity and decline F MNC increasingly seeks both markets and ever lower cost production abroad n The product life cycle and the MNC < the launch phase F multinational spread likely to be limited < the growth phase F MNC likely to shift production abroad in order to retain cost competitiveness < maturity F MNC increasingly seeks markets abroad as growth in home market slows < late maturity and decline F MNC increasingly seeks both markets and ever lower cost production abroad Business Strategy in a Global Economy

n Problems facing multinationals < language barriers < selling and marketing F cultural issues < relations with host governments < relationships between subsidiaries F possible diseconomies of scale F easier if subsidiaries are run independently n The global strategy trade-off < economies of scale of standardisation or higher costs of customisation? F determinants of trade-off n Problems facing multinationals < language barriers < selling and marketing F cultural issues < relations with host governments < relationships between subsidiaries F possible diseconomies of scale F easier if subsidiaries are run independently n The global strategy trade-off < economies of scale of standardisation or higher costs of customisation? F determinants of trade-off Problems Facing Multinationals

MNC Investment and the Host State n Advantages of MNC investment < employment < balance of payments < technology transfer < tax revenues n Disadvantages < uncertainty < power and control by the MNC over the host < transfer pricing < the environment n Advantages of MNC investment < employment < balance of payments < technology transfer < tax revenues n Disadvantages < uncertainty < power and control by the MNC over the host < transfer pricing < the environment

Is Globalisation a 'Good Thing'? n 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 n The costs < can exacerbate inequality < erodes national cultures < environmental costs < domination by MNCs n 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 n The costs < can exacerbate inequality < erodes national cultures < environmental costs < domination by MNCs