2. What are MNEs?

Question 1

Tangled Webs: Unravelling Complexity In The Global Economy

Key words: Global production networks, financialization, transnational corporations, processes of globalization, connectivity, complexity, geographical clusters

Answer 1

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Question 2

A simplified analytical framework of the global economy

-> Folie 3 ansehen und beschriften

Answer 2

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Question 3

Global Production
Networks (GPNs)

GNPs are networks which are ?(1)? and ?(2)? across national boundaries rather than actually spanning the whole world.

Answer 3

(1) geographically extensive

(2) functionally integrated

Question 4

Traits (Eigenschaften) of Global Production Networks (GPNs): ?? (4)

Answer 4

Turning inputs into outputs through production circuits

Unevenness of power relations

Involved in both cooperation and competition at the same time

Integrate firms into structures which blur traditional organizational boundaries (Deutsch: Integration von Unternehmen in Strukturen, die die traditionellen Organisationsgrenzen verwischen)

Question 5

What are the basic components of a production circuits? (4)

Answer 5

Inputs (of materials and non-materials)

<–>

Transformation (of inputs into semi-finished or finished goods or services)

<–>

Distribution (of the goods or services)

<–>

Consumption (of the goods and services)

(
–> : Flow of materials and products
<– : Flows of information
)

Question 6

The basic components of a production circuits

Welche Inputs treten entlang von Produktionskreisläufen auf? (4)

Answer 6

Technology Inputs (Research, design, quality control, product and process technologies)

Energy Inputs (Electricity, oil, coal, gas, nuclear and renewables)

Service Inputs (Procurement, accountancy, insurance, human resources, legal, advertising, marketing, sales, maintenance)

Logistical Inputs (Coordination of supply chains, movement of materials, products, people and information)

–> Abbildung Folie 6!

Question 7

The basic components of a product circuits

Folie 7 ansehen !!!

Answer 7

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Question 8

Who are the actors of Globalization? (5)

Answer 8

Transnational Corporations

States

Civil Society Organizations

Labour

Consumers

Question 9

Major actor-centred networks in the global economy

–> Abb Folie 9 !

Answer 9

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Question 10

What are Transnational Corporations?

Answer 10

= firms with the power to coordinate and control operations in more than one country, even if they do not own them

Question 11

firms with the power to coordinate and control operations in more than one country, even if they do not own them

Definition of what?

Answer 11

Transnational Corporations

Question 12

Transnational Corporation

The firm owns the activity across the globe

What mode does the firm follow?

Answer 12

equity mode

Question 13

Transnational Corporation

The firm do not own the activity but it is made by independent firms across the globe.

What mode does the firm follow?

Answer 13

non-equity mode

Question 14

A Transnational Corporation has the ability to coordinate and control different processes and transactions.

True/False?

Answer 14

True

Question 15

Transnational Corporations take advantages of ?? differences

Answer 15

geographical

-> i.e. factor of production, state policies

Question 16

Transnational Corporations have the ability to change location according to international events.

True/False?

Answer 16

True

-> geographical flexibility

Question 17

Transnational Corporation

The coordination process depends on what?

Answer 17

the boundary of the TNC

Question 18

Transnational Corporation

The coordination process depends on the boundary of the TNC:

• The boundary is the property of the firm
• any activity can be ?(1)? or ?(2)?

Answer 18

(1) internalized (=made inside the firm)

(2) externalized (= made by somebody else via contractual arrangements)

Question 19

Transnational Corporation

Any activity can be internalized (= made inside the firm) or externalized (= made by somebody else via contractual arrangements)

1) Internalized transaction when?

2) Externalized transaction when?

Answer 19

1) when all the activities are internalized

2) when all the activities are externalized

Question 20

Transnational Corporation

Power relationship highly influence firms’ network shape. Some actors can have more power over others.

Answer 20

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Question 21

The Role of State

Nation-state is the most important bounded territory, but to follow a global rule is not possible –> MNE’s subsidiaries are bounded to ??
-> political structure of that state influence economics relationships

Answer 21

national law

Question 22

The Role of State

Taxes and incentives überarbeiten

Answer 22

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Question 23

Minimum Global Tax for MNEs

Answer 23

https://www.oecd.org/tax/beps/statement-on-a-two-pillar-solution-to-address-the-tax-challenges-arising-from-the-digitalisation-of-the-economy-october-2021.htm

https://www.youtube.com/watch?v=aj2zymlPqow

Question 24

The triangular nexus of relationships between firms and states

-> Folie 16!!

Answer 24

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Question 25

Knowledge Workers embody the knowledge. each products needs direct or indirect workers for its production process Mobility of workers is limited according to their culture but they have freewill to decide where to go

Answer 25

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Question 26

Consumers Consumptions change according to the sector B2B = Consumers of inntermediary goods B2C = Consumers of finished goods Influenced by: ?? (3)

Answer 26

Income Social and Cultural process (i.e. fashion) Role of Marketing Managers

Question 27

Apple is 8th (500 Fortune List) -> Folie 19

Answer 27

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Question 28

Global civil society organizations -> read slide 20 !!

Answer 28

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Question 29

Geography Clusters Generalized clusters reflect what?

Answer 29

the agglomeration of people due to common human activities (i.e. commuters, communities) (Deepl: Allgemeine Cluster spiegeln die Agglomeration von Menschen aufgrund gemeinsamer menschlicher Aktivitäten wider (z. B. Pendler, Gemeinden) -> Agglomeration: räumliche Ansammlung)

Question 30

Geography Clusters Specialized clusters reflect what?

Answer 30

the specificity of a firm to agglomerate to other firms for leveraging economies of scale (so called industrial district) (Spezialisierte Cluster spiegeln die Besonderheit eines Unternehmens wider, sich mit anderen Unternehmen zusammenzuschließen, um Größenvorteile zu nutzen (so genannte Industriegebiete).)

Question 31

Modern slavery is a widespread global issue that does not have one clear universal definition True/False

Answer 31

True

Question 32

Modern slavery includes practices such as forced labour, human trafficking, servitude slavery, child labour and forced marriage Source: Anti-Slavery International

Answer 32

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Question 33

How many people are victims of modern slavery worldwide?

Answer 33

40,3 million (estimated)

Question 34

How much money is forced labour generating globally?

Answer 34

annual profits of over $150 billion (USD) Source: International Labour Office

Question 35

Networks of Networks Global economy should be seen as a grounded network of: ?(1)?, ?(2)? and ?(3)? networks

Answer 35

(1) organizational (2) geographical (3) production

Question 36

Networks of Networks Organizational networks = production circuits and networks Geographical networks = localized clusters of economic activities production networks = nexus of interconnected functions and operations through which goods and services are produced and distributed

Answer 36

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Question 37

Interconnecting dimensions in a globalizing economy Name 3 dimensions!

Answer 37

(a) the 'vertical' dimension -> Global production networks (individual manufacturing and service sectors) (b) the 'horizontal' dimension -> Territorial systems at different geographical scales (Nation, Local community, Region) (c) the 'global' system -> Global production networks (Territorial systems) --> vereint vertikale und horizontale Dimension (!) Folie 24!

Question 38

Transnational Corporations: The Primary 'Movers and Shapers' of the Global Economy

Answer 38

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Question 39

Nature of the TNC What is a transnational corporation (TNC)? (Definition)

Answer 39

A transnational corporation is a firm that has the power to coordinate and control operations in more than one country, even if it does not own them.

Question 40

Name two basic characteristics of TNCs

Answer 40

they are networks within networks control and coordination is more complex than a domestic firm

Question 41

Firms are going abroad for what?

Answer 41

Market seeking (Size) Internal Structure Accessibility (of some resources) Asset Seeking (Knowledge, Labour, Costs)

Question 42

New MNEs - Latecomers - Newcomers - Born Global (e.g. Zara)

Answer 42

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Question 43

Usually there is an Evolution of TNCs Diverse pathways of TNC evolution -> slide 30 ansehen !!!!!!!!!

Answer 43

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Question 44

A global integration-local responsiveness framework -> Folie 31!!

Answer 44

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Question 45

A global integration-local responsiveness framework Name Pressures for global strategic co-ordination! (7)

Answer 45

Importance of multinational customers Presence of multinational competitors Investment intensity Technology intensity Pressure for cost reduction Universal needs Access to raw materials and energy

Question 46

A global integration-local responsiveness framework Name pressures for local responsiveness! (5)

Answer 46

Differences in consumer needs Differences in distribution channels Availability of substitutes and the need to adapt market structure host government demands

Question 47

Multinational corporation (MNC) = multinational enterprise (MNE) = transnational enterprise (TNE) = transnational corporation (TNC) = international corporation (Wikipedia)

Answer 47

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Question 48

TNCs as networks within networks -> slide 32 ansehen !!!

Answer 48

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Question 49

TNCs = MNEs True / False?

Answer 49

True

Question 50

?? are networks within networks, structured through a myriad of complex relationships, transactions, exchanges and interactions within their own internal corporate network and between that network and those of the other key actors with whom ??must interact.

Answer 50

TNCs

Question 51

Why is it vastly more complex to coordinate and controle the internal and external networked activities of a TNC's networks in comparison to a purely domestic firm?

Answer 51

Because TNC's networks are spread across, and embedded within different national jurisdictions and contexts

Question 52

Configuring the TNC's international networks When growth occurs, any organism (or organization) has to change -> Change in ?(1)? becoming more specialized -> Increase ?(2)? in the links with other functions Not adding function but becoming more ?(3)?

Answer 52

(1) functional role (2) complexity (3) product oriented

Question 53

Types of TNC organizational architecture Name the 4

Answer 53

a) Product division structure with seperate international division b) Global product division structure c) Global geographical division structure d) Simplified global matrix structure -> Folie 35 ansehen!!!!!!!!! -> Struktur den Schaubildern zuordnen und verstehen

Question 54

Name 4 model of organization!

Answer 54

Multinational organization International organization Global organization Matrix or Integrated network model

Question 55

decentralize operations in response to national market differences Which model of organization ist it?

Answer 55

= multinational organization

Question 56

capitalize firm-specific assets of technological leadership or marketing power Which model of organization ist it?

Answer 56

International organization

Question 57

All assets are centralized, the HQ coordinates policies and actions of subsidiaries Which model of organization ist it?

Answer 57

= global organization

Question 58

flexible network for orchestrating production, inbound and outbound logistics, services etc. Which model of organization ist it?

Answer 58

= matrix or integrated network model

Question 59

HQs and subsidiary relationships name 3 different types?

Answer 59

The local implementer The specialized contributor The world mandate

Question 60

HQs and subsidiary relationships The local implementer has limited ?(1)? and ?(2)?.

Answer 60

(1) geographical scope (2) functions

Question 61

HQs and subsidiary relationships The specialized contributor: specific expertise tightly integrated into the activities of other subsidiaries in the TNC. Narrow range of ?(1)? and a high level of ?(2)? with other parts of the firm.

Answer 61

(1) functions (2) interdependence

Question 62

HQs and subsidiary relationships The world mandate: worldwide (or possibly regional) responsibility for what?

Answer 62

a particular product or type of business

Question 63

The Nutella global value chain -> Folie 38!!

Answer 63

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Question 64

Concepts to Review: - FDI - Global production networks (GPNs) - Equity and Non-equity - actors - role of states - MNEs configuration

Answer 64

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