BU491 Chapter Notes - Chapter 1: Franchising, Foreign Direct Investment, Electronic Program Guide

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What is a multinational enterprise (mne: mne creates an internal organization to carry out cross border tasks and transactions internally, rather than depending on trade through the external markets, characteristics of a true mne: Substantial direct investment in foreign countries (not just trading relationships of an import-export business) Active coordinated management of these offshore assets (not simply holding them as a passive financial portfolio) Strategic and organizational integration of operations located in different countries. Regardless of the definition, you still require active coordinated management. Motivations to internationalize: traditional motivations (pre 1970): secure raw materials, exploit factor cost differences, it is rarely because of idiosyncratic ceos (family ties, home in mexico) protect exports and provide growth. Market seeking: fill capacity, exploit competitive advantages and economies of scale and scope this was particularly for companies that had an intrinsic advantage, such as brand recognition or technology. Exploit factor cost differences (access low-cost factors of production, labour and capital: emerging motivations.

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