BU491 Chapter Notes - Chapter 1: Multinational Corporation
BU491 Chapter 1 – Expanding Abroad: Motivations, Means, and Mentalities
Opening up to a global market provides you with new opportunities and lower costs, but can
present many challenges
The MNE: Definition, Scope, and Influence
MNE = multi-national enterprise
It actually needs to have a direct foreign investment (not just import-export)
It’s actually a recent phenomenon
These companies need to:
oHave operations in multiple countries
oHave decision making that permits common policies and similar strategies across
divisions in diff. countries
oShare knowledge, resources, and responsibilities
These huge companies can rely on their internal systems to carry out cross-border transactions
rather than turning to external trading markets
There’s over 65,000 MNEs and they contribute to a quarter of world GDP
oBig companies like Apple, Toyota, Pepsi, etc.
The Motivations: Pushes and Pulls to Internationalize (why a company would want to go global)
Traditional Motivations
oSecure key supplies
i.e. securing the oil in Canada or the Middle East
oMarket-seeking behaviour
i.e. when you have a strong brand that can perform well in new markets
Increase your sales by accessing the consumers in another country
i.e. Volkswagen expanded internationally because the market in Europe
wasn’t big enough
oDesire to access low-cost production
Most of the manufacturing occurs in China or India because the labour cost is so
much lower than Canada/USA
Emerging Motivations
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Bu491 chapter 1 expanding abroad: motivations, means, and mentalities. Opening up to a global market provides you with new opportunities and lower costs, but can present many challenges. It actually needs to have a direct foreign investment (not just import-export) These companies need to: have operations in multiple countries, have decision making that permits common policies and similar strategies across divisions in diff. countries, share knowledge, resources, and responsibilities. These huge companies can rely on their internal systems to carry out cross-border transactions rather than turning to external trading markets. There"s over 65,000 mnes and they contribute to a quarter of world gdp: big companies like apple, toyota, pepsi, etc. The motivations: pushes and pulls to internationalize (why a company would want to go global) Traditional motivations: secure key supplies i. e. securing the oil in canada or the middle east, market-seeking behaviour i. e. when you have a strong brand that can perform well in new markets.
