1. California State University, Fullerton
Multinational Financial Management Alan Shapiro 10th Edition John Wiley & Sons, Inc.
PowerPoints by
Joseph F. Greco, Ph.D.
California State University, Fullerton

2. CHAPTER 1
Introduction: Multinational Enterprise and Multinational Financial Management

3. 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 3

4. 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 4

5. THE RISE OF THE MULTINATIONAL CORPORATION
RAW MATERIAL SEEKERS
exploit markets in other countries
historically first to appear
modern-day counterparts
British Petroleum
Exxon 5

6. 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 6

7. 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 7

8. THE PROCESS OF OVERSEAS EXPANSION
I. OVERVIEW: A. Informal Exporting B. Sales Subsidiary C. Creation of Distribution System B. Overseas Production C. Licensing 8

9. THE PROCESS OF OVERSEAS EXPANSION
A. Exporting
1. Minimal cost and risks
2. Low profits
3. Get to know the market

10. THE PROCESS OF OVERSEAS EXPANSION
B. Sales Subsidiary
1. local office
2. greater customer service
3. increased communication

11. THE PROCESS OF OVERSEAS EXPANSION
C. Creation of a Distribution System
1. new service facilities set up
2. create a warehouse system
3. marketing activities within a company’s own distribution system

12. THE PROCESS OF OVERSEAS EXPANSION
D. Overseas Production
1. realize full sales potential
2. keep abreast of market developments
3. fill orders faster
4. greatest risk to the company with greatest
potential for profit

13. THE PROCESS OF OVERSEAS EXPANSION
D. Licensing
1. Alternative to setting up local production
2. Less risk than setting up local production
3. Relatively lower cash flow
4. Faster market entry time
5. Maintaining quality standards may be a problem

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