Multinational Financial Management Alan Shapiro 8 th Edition J.Wiley & Sons Power Points by Joseph F. Greco, Ph.D. California State University, Fullerton

CHAPTER 1 Introduction: Multinational Enterprise and Multinational Financial Management

3 PART I. THE RISE OF INTER-MODAL INTERNATIONAL TRADE A.THE REVOLUTION IN WORLD TRADE AND FINANCE (1985) 1. Containerization a. Containers (20’ (TEU) and 40’) b. Make Inter-modal transport possible

4 This New Method of Shipping Has Revolutionized Global Trade and Finance

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

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

7 Port of Long Beach/Los Angeles

8 A Containerized Port in China

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

13 A “Small” Container Ship

14 Intermodal Transport

15 FromDepartureArrivalTransitServiceVessel Long BeachTue Sep 25Sat Oct 1318 daysAWEPDPriwall New York MetroMon Sep 17Tue Oct 1629 daysAWELt Genova OaklandTue Oct 2Wed Oct 1715 daysPSPD1H.J. Athens Le HavreThu Sep 27Wed Oct 1720 daysCEXH.J. Savannah OaklandFri Oct 5Fri Oct 1914 daysPSPD2Portugal Senator Le HavreFri Sep 28Fri Oct 1921 daysPDAH.J. Amsterdam Long BeachTue Oct 2Sat Oct 2018 daysAWEPDGerman Senator Voyages to Hong Kong on Hanjin The Time Length Of Global Shipping

16 PART 1 THE RISE OF THE MULTINATIONAL CORPORATION I. The MNC: A Definition – a company with production and distribution facilities in more than one country. – with a parent company located in the home country – at least five or six foreign subsidiaries

17 THE RISE OF THE MULTINATIONAL CORPORATION The MNC’s Evolution Reasons to Go Global: 1. More raw materials 2. New markets 3. Minimize costs of production

18 THE RISE OF THE MULTINATIONAL CORPORATION RAW MATERIAL SEEKERS exploit markets in other countries historically first to appear modern-day counterparts British Petroleum Exxon

19 THE RISE OF THE MULTINATIONAL CORPORATION MARKET SEEKERS Produce and sell in foreign markets Have heavy foreign direct investors Represented today by firms such as: IBM MacDonald’s Nestle Levi Strauss

20 THE RISE OF THE MULTINATIONAL CORPORATION COST MINIMIZERS seek lower-cost production abroad Their motive: to remain cost competitive Represented today by firms such as: Texas Instruments Intel Seagate Technology