1. Evolving Multinational
We are taking a dynamic point of view
Firms evolve along three basic dimensions: - geography
- line of business
- functional migration
1. Geographic expansion
direction governed by proximity - geographic
` - cultural
- similar level of economic development
2. Line of Business - (not well researched)
Evidence suggests we start with a line of business that has a strong competitive
advantage over domestic companies.
Then as we learn more about the local market (in a sense the high margins
subsidize our learning) we can move into less competitively distinctive markets

2. 3. Functional migration -
Scope of functions performed by local subsidiary increases over time
Exporting
-almost none
Foreign subsidiary
-sales
-accounting
-assembly
- design
- procurement
-business planning
-strategic leadership
Evolution can be either
- continuous - goes through all the stages
or punctuated (discontinuous) - skips some steps, e.g. entering one EEC country to do business in them all

3. 1. Identifying opportunities for scale and scope economies
Reverse evolution - (same as restructuring, re-engineering in domestic context)
Problem: We’ve got too big to be efficient, we need to reduce, simplify
e.g. go from a country-by-country approach to regional - serve all countries in a
region from a single country
Reverse evolution often associated with old established MNC’s, that now find
economic, political, technological environment has changed so that old
patterns of structure and doing business no longer work.
Outcome is often an asymmetric mix of
- functions
- sets of lines of business
- irregular (dissimilar) set of international subsidiaries
Task for the MNC:
1. Identifying opportunities for scale and scope economies
2. Actively leveraging knowledge and experience across dimensions