MNE Topic 2 Flashcards
three sets of conflicting external pressures/forces
daily challenges, account for strategies
- forces for cross-border integration & coordination
- national differentiation and responsiveness
- worldwide innovation and learning
main forces for global integration and coordination
- exploitation of EOS& scope
- exploit differentials in costs of factors of production (raw materials/labour)
- competitive positioning (global chess)
- rise of liberalised trade environment
1,2, = globalisation -> transformed themselves
economies of scale
proportionate increases in amounts of inputs employed in production = lower unit costs -> Grant 2013
- increase production -> make sure domestic can buy -> domestic small therefore go abroad to get demand
economies of scope
cost of joint production (or development or distribution) of 2 or more products = less than cost of producing them separate (Bartlett and Beamish 2018)
competitive positioning
Japanese in automotive sector
using profit to subsidise loss in other markets
e.g. BA -> profit in long distance -> subsidise loss in short distance = push out competitors
- financial and strategic interdependencies
liberalised trade environment
cost of importer = lower
trade agreements
waves of globalisation
- pace of globalisation = accelerated and complexity
- 1830-1900 (phone/rail)
- 1900-1930 (electricity & steel)
Great Depression and war 2 - 1948-1970 (US dominant = least harm from war 2) - reduce trade barriers
end of boom 1970s
new economic system 1980s - 1980 - (tech trigger, personal computer/internet, service sectors = tourism)
international trade environment
today = more restricted vs one at beginning of 21st century
-Brexit = job loss (automation) - political reasons
- purchasing power of emerging -> buy from advanced -> global customers
- globalisation can be blamed for job losses but this is due to tech advances and we are more productive
- number of players is increasing - emerging economies increasing
- war and covid
forces for national differentiation and responsiveness - main forces for local responsiveness
- National
- Host governments demands (policy)
- growing pressure for localisation
National force for local responsiveness
- culture
- consumer behaviour (e.g. differences in tea)
- doing business (e.g. Sweden libertarian country) - infrastructure - local standards (TV transmission/voltage) and distribution channels (supermarket and local bazaar)
Hofstede and Globe Studies
relate to the way of doing business
1. power distance
2. uncertainty avoidance
3. individualism
4. masculinity
Host Governments demands force for local responsiveness
- national laws and regulations
- host country pressures and demands
Growing pressure for localisation force for local responsiveness
- culturally sensitive flexibility and responsiveness
- appeal to nationalism - e.g. Brexit
- mass customisation - advance tech and automation and AI -> effective way
forces for worldwide innovation and learning
increased need for rapid & coordinated worldwide innovation driven by
- shortening PLC
- Increased R&D costs (more complex products as new techs) ->cross patenting share resources with other companies or share license -> strategic alliances - get money back ASAP
- emergence of global tech standards
- competitors ability to develop and diffuse innovation globally (trends everywhere
How to respond to the different forces
= industry effect = mapping industries according to their degree of globalisation (varies)
- dominating forces/strength of forces (globalisation vs local response)
- degree of globalisation evolves -> 1990s onwards = many transnational, some de-globalised after wave of globalisation
