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1 Multinational Financial Management Alan Shapiro 10 th Edition John Wiley & Sons, Inc. PowerPoints by Joseph F. Greco, Ph.D. California State University, Fullerton
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CHAPTER 16 Corporate Strategy and Foreign Direct Investment
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THE THEORY OF THE MULTINATIONAL CORPORATION I.THE THEORY OF THE MULTINATIONAL CORPORATION A.The MNC as an Oligopolist: 1. When is FDI justified? 2. Internalization 3. Market Integration a.Vertical b.Horizontal
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THE THEORY OF THE MULTINATIONAL CORPORATION B.Financial Market Imperfections 1.Hypothesis 2.Diversification Effect of the MNC
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THE STRATEGY OF THE MNC II.THE STRATEGY OF THE MNC A.Three strategies: 1. The Innovation-based MNC
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THE STRATEGY OF THE MNC Strategies (con’t) 2.The Mature MNC a. the importance of economies of scale and b. economies of scope
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THE STRATEGY OF THE MNC 3.The Senescent MNC a. global scanning capability b. the role of rationalization and integration.
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THE STRATEGY OF THE MNC 4.FDI and Survival a. Cost reduction b. Economies of scale c. Multiple sourcing d. Keeping domestic customers
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DESIGNING A GLOBAL EXPANSION STRATEGY III.HOW TO DESIGN A GLOBAL EXPANSION STRATEGY There are 5 Necessary Elements
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DESIGNING A GLOBAL EXPANSION STRATEGY A. 5 Necessary Elements 1. Awareness of profitable investments -building competitive advantage 2. Selecting a mode of entry -evaluate systematically 3. Adjusting the Effectiveness of the Entry Mode - continual auditing
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DESIGNING A GLOBAL EXPANSION STRATEGY A.5 Necessary Elements (con’t) 4. Using appropriate evaluation criteria 5. Estimating the longevity of competitive advantage: a. Develop competitive strength transferable overseas. b. Not easily duplicated
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