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International business management > week five - multinational firms > Flashcards

week five - multinational firms Flashcards

1
Q

define direct investment

A

is a category of cross-border investment made by a resident in one economy with the objective of establishing a lasting interest in an enterprise that is in another economy

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2
Q

what are FDI inflows

A

net direct investment coming from a foreign country into our country

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3
Q

what are FDI outflows

A

net direct investment exiting our country to enter a foreign country

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4
Q

what is net FDI

A

the difference between FDI inflows and outflows

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5
Q

what is a net receiver vs net investor

A
  • receiver: inflows > outflows
  • investor: inflows < outflows
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6
Q

what are some deterrents of globalisation

A

1) COVID containment policies
2) geopolitical tensions (e.g. ukraine war)
3) negative perceptions of globalisation
4) increased transportation costs and logistic problems

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7
Q

where has had the biggest increases of FDI flows globally

A
  • flows to Asia increased by 19%, mainly to south east Asia
  • flows to latin America and the Caribbean increased by 56%
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8
Q

what % of GNP was multi nationalisation in the 90s and 2000s

A
  • 90s: 1%
  • 2000s: 10%
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9
Q

what are the main sectors in Spain that receive FDI

A
  • primary
  • manufacture
  • energy
  • construction
  • wholesale
  • transport
  • hospitality
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10
Q

what is the relationship between FDI and country development

A
  • less developed countries are net FDI receivers
  • more developed countries are net FDI issuers
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11
Q

why are less developed countries net FDI receivers

A

because MNCs often look for cheaper production, more permissive environments and investments at good prices

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12
Q

what does FDI tell about the behaviour of multinational companies

A
  • the strength of their company
  • local factors in countries that may attract foreign companies
  • the position of a country in global value chains
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13
Q

why is it important to study FDI

A
  • FDI is one of the factors that explain the development of countries
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14
Q

benefits of FDI

A
  • new technology
  • new business models
  • innovation
  • creation of employment
  • increase country export
  • introduce local competence
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15
Q

what is an emerging economy

A

countries that have some characteristics of a developed country/market but does not satisfy to be termed a developed country/market

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16
Q

what are the four largest emerging economies known as

A

BRIC countries (brazil, russia, india and china)

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17
Q

characteristics of emerging countries

A
  • new FDI contributors
  • volatile environments but growing at high rates
  • deficiencies in infrastructures and institutions
18
Q

what are multiLatinas

A

multinationals originated in Latin American countries as industry leaders, acquiring large companies in developed countries

19
Q

what are MNCs in emerging countries called

A

EMNE - emerging markets multinationals

20
Q

what are EMNE’s competitive advantages

A
  • production efficiency (low production costs)
  • technology adaptation and reverse innovation
  • focus on market niches
  • experience in acquisition processes
  • political and entrepreneurial capabilities (experience in working in volatile environments)
21
Q

EMNC traits

A
  • execution capabilities and good at adaptation
  • ability to move in adverse environments
  • multicultural abilities
  • ability to combine objectives with local approach
22
Q

what is the internationalisation profile of new EMNCs

A
  • accelerated processes are usual
  • simultaneous entry in developed and emerging countries
  • business development modality: mainly external (acquisitions, alliances)
  • search for flexibility and global efficiency
23
Q

what are the future challenges for EMNCs

A
  • country brand image improvement
  • enhancement of managerial capabilities
  • global corporate social responsibilities
24
Q

benefits of global value chains

A

allows firms to integrate activities, improve flexibility and increase added value

25
Q

what is reshoring

A

the relocation of previously offshored value chain activities (e.g. production, sourcing, R&D, services)

26
Q

what are the six main drivers of reshoring

A

1) reducing supply chain risks
2) automation of production process
3) rationalisation of costs
4) ‘made in’ effect (country of origin effect)
5) standardisation of business practices/quality
6) firms global reorganisation

27
Q

what might force the redesign of global value chains

A

fragmentation of world trade, shortage of some item…

28
Q

what is regionalisation

A

a solution between the local and the global, offering some of the benefits of both without some of the associated costs (complexity, distance, and liability of foreigness)

29
Q

graph for regionalisation and reshoring

A

lecture slides 5

30
Q

what is a digital economy

A

an economy where part of the economic output is derived from digital technologies with a business model based on digital goods or services, comprises digital infrastructures, e-commerce and digital media

31
Q

what is digitalisation

A

changing hoe firms orchestrate their resources and interact with one another

32
Q

according to UNCTAD (2022) how can the digital economy be broken up

A

1) core technologies and economic aspects
2) strict digital and information sector (IT)
3) diigitally enabled sectors, e.g. e-commerce

33
Q

what are the main advantages of digitalisation for international firms

A

1) acceleration of knowledge creation, identification of new market opportunities and access to larger production factor markets in foreign countries
2) development of new product and service innovations and organisational capabilities to improve international competitiveness
3) expand connectivity and interconnection between network partners (suppliers, customers, distributors), facilitates vertical disintegration and creation of dispersed value creation
4) reconfiguration of operations supporting synergies in the supply chain by helping to make decisions to move, partially or entirely, production abroad - reduces location dependencies

34
Q

benefits of digitalisation

A
  • cost reduction
  • time to market
  • greater transparency
  • better levels of customer audibility
35
Q

what is sustainability

A

the seeking of human welfare, protecting the resources needed for human needs without compromising the possibilities of future generations

36
Q

what is sustainable business practise driven by

A

pressures/expectations from stakeholders (customers, competitors, suppliers, investors)

37
Q

what are some sustainable business practises related to social responsibility

A

voluntary work

38
Q

what are some sustainable business practises related to environmental responsibility

A

environment protection measures, reducing water and noise pollution

39
Q

what is a circular economy

A

an alternative way of thinking focussing on preserving product and material value, preventing waste and keeping products and resources within the system by cycling them

40
Q

what is circular transition

A

a solution to great challenges and promoted by institutions

41
Q

benefits of sustainable business practises

A
  • reduces CO2 emissions
  • firms contribute by pushing partner responsiveness
42
Q

challenges for international firms to implement sustainable business practises

A
  • implementation of novel business models
  • organising costs of circular systems
  • new external relationships with stakeholders: engage local suppliers and make GVC circular
  • increasing complexity and coordination; increase of interdependencies
  • requirements for digital transformation in the company to support sustainable practises

International business management (6 decks)

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