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1
Q

What are the types of FDI investment?

A

Ownership Agreement: Majority owned, Equal ownership, or Minority Ownership
Type of Partner: Wholly Owned, MNE Partner, Local Government, Local Private, Local Public.
Scale: Full Scale, Pack & Assembly, Warehousing.

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2
Q

What are the Stages of Development of International Business?

A

Outward:Indirect or ad hoc exporting
Active exporting
Equity Investment
Full scale MN marketing and production.

Inward: Importing/Sourcing
Act as Licensee for a foreign parent
Partner Foreign co in JV
Manage foreign owned subsidiary.

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3
Q

Motivations for FDI

A 
Seek resources
Seek Markets
Seek Efficiency
Seek Strategic Advantage
Hubris

Make/Buy Decision, Organic Growth, Slow but safe?

Better than acquisition, most fail.

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4
Q

2000 vs. 1970 (Resource Seeking)

A

Diff: 2000 puts more emphasis on local processing.

Same: - issues of availability, price, quality

	- infrastructure - transport, banking, community
	- government restrictions - capital, dividends
	- investment incentives
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5
Q

2000 vs. 1970 (Market Seeking)

A

Diff: more middle class, more regional trade blocs, more alternatives for suppliers/markets/services, better infrastructure, greater need to be close to customers.

Same: Issues cost - wages, materials, transport

  • Infrastructure - transport, banking, community
  • Government restrictions - capital, dividends, protectionism.
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6
Q

2000 vs. 1970 (Efficiency Seeking)

A

Diff: More choice of skilled labor, service and supply firms.
More realistic favourable gov’t policies.

Same: Focus on production costs, focus on freedom, investment incentives.

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7
Q

Differences and similarities between 2000 vs 1970

Strategic Asset Seeking

A

Diff: More dispersion of knowledge based assets.
More support related services
More two way relationships
More reverse flow of idea

Same: Same issues, but more highly developed. There is more choice, range of alternatives.

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8
Q

How did international trade begin?

A

Phoenicians traded the length of the Mediterranean to England and Africa.

Roman Empire traded with China, India, Tropical Africa, and England.

Arabs traded from Mozambique to the interior of the Congo to southern phillipines.

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9
Q

What are some of the moral issue of International Trade?

A

What should be the role, still lots of poverty.
Ecological Issues
Exploitation of the weak - lack of regulation, excess cost cutting, instances of close to slavery.

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10
Q

What are the three main differences between domestic business that is fixed but variable internationally?

A

Law
Government
Culture

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11
Q

What is a market?

A

A market is enough people with enough money who want.

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12
Q

What are the population trends we are seeing globally?

A

High rate of growth in developing countries - BLOCK countries

Emerging middle class - China, Mexico, India, Brazil, Chile, Argentina, Indonesia

Shift in age distribution to older

Impacts of disease - AIDS, Malaria, TB

Migration from countryside to urban 5/95 –> 95/5

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13
Q

Income distribution - Does development increase poverty?

A

Urban poverty - more visible, seems to be more. Perceptual bias - ideal notions of rural utopia.

Family Structure changes - Nuclear and sub-nuclear families.
Erosion of the extended family
Shift from polygamy to monogamy in the middle easy
Breakdown of the two parent structure.

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14
Q

What are some of the issues of Economic Data?

A

Bad counting
Outside the cash economy- subsistence agriculture, barter, household production.
Outside the statistical net - Black economy, Unofficial economy, informal sector

Tax evasion

Problems of Comparability - Foreign exchange rate, PPP, market rates.

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15
Q

What are some trends in international trade?

A

Differences in Absolute size of Trade

Differences in relative importance of trade to economy

Differences in the economic basis of trade - commodities, manufacturing, tourism, services, finance, consultancy.

National Economics moving toward service, Trade in manu. is fastest growing, trade becoming more multilateral (more countries), composition of trade has changed.

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16
Q

Reasons for changes in International Trade

A

Spread of Tech
Cheaper transport
Rising Real wages in some countries
Effects of quotas and other admin barrier in shifting production

Development of export promotion strategies.

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17
Q

What countries and areas dominate 3/4 of the worlds trade?

A

Europe, Japan, China, America

1/3 of all trade is intra-firm

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18
Q

What are some of the main concerns beyond economics?

A

Environment
Human Rights
Democracy

Increasing awareness of non-economic costs or better yet,
Externalities: Costs incurred by the society, but not absorbed by the company or reflected on the balance sheet.

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19
Q

Who benefits from Intl trade?

A

Consumers: increases supply, competition, decreases price.

Producers: Increases demand, increases prices.

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20
Q

What are the two fundamental issues of International trade?

A

Economic theory vs practice: Says free trade is good but costs jobs, industries, disruption, so societies inact protection measures.

History: Great depression cannot happen again - collapsed intl trade and all markets.

End of war created UN - No more war - and IMF, World Bank, GATT

IMF - Bailed out western banks
World Bank - Spurred little growth
GATT - Slow partial, series of bilarteral agreements.

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21
Q

What are the market share, XC rate, Debtor/Creditor position of the US?

A

12.6% of Exports, 16.1% of imports worldwide - mostly petro

Currency was devlaued in the 80s - easier to export, up in 90s, easier to import.

Constantly running a trade deficit, used to be the biggest creditor at 400bn, not biggest debtor and 900bn. Paying by selling assets.

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22
Q

What are some ways US uses protectionism?

A

About 24% of imports are protected - CDN potatoes, lumber, shell fish, steel

Agriculture is subsidized and protected everywhere.

Many products subject to quotas, especially labor intensive items like textiles, footwear, clothing.

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23
Q

Dimensions of the Struggle for Balance are

A

Protectionism vs. Free Trade
Agriculture vs. Industry
Developed Countries vs. Less Developed Countries
Regional Arrangement vs. Global Arrangements

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24
Q

STEP Analysis is:

A

Social
Technological
Economic
Political

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25
Q

Traditional Theorems of International Trade

A

Trade improves the welfare of the factors used more intensively

Welfare of producers improves in exporting sector relative to producers in importing sector

Welfare of consumer in importing sector improves relative to consumers in exporting sector

Exports are biased towards resource abundance

Trade brings about equalization of incomes, interest rates, and rents among all countries in the long run.

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26
Q

What are some of the newer theories of Intl Trade?

A

Importance of branding and product differentiation

Importance of clusters - coming together of groups of industries which are mutually supportive.

Modern determinants of success are no just costs of factors but design, quality, marketing skills and supply chain.

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27
Q

Differences in Exchange rates are determined by a variety of factors

A 
Inflation rates
Capital movements
FDI
Portfolio investment
Savings rates
Terms of Trade
Natural resource endowment
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28
Q

If the Canadian dollar goes up what happens to Imports and exports?

A

When the dollar goes up then imports will go up, exports will go down.

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29
Q

Effects on the Exchange rates

A

Exchange Rate and Savings: Low saving and high demand for capital leads to FDI, increasing XR.

Portfolio Investment: TSX brings in money from abroad, increasing the exchange rate in the short run, lower it in the long run.

Labor Relations: Higher exchange rates will reduce competitiveness in our export industry and lead to layoffs and unrest.

Terms of Trade: Ratio of Unit export price vs Import Price, if ratio increases, exchange rate increases.

Discovery of natural resources: Strengthens home currency.

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30
Q

What are generic export strategies?

A

Export one standard product to all markets

Introduce a product in home market, then begin to export during maturity

Customize product for each export market. Modify product to suit conditions - consumers preferences, patterns of use, physical conditions.

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31
Q

What are the three factor mix for exporting?

A

Product Quality
Price
Product Features

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32
Q

What are the different ways to segment markets?

A

Geographically
Income - Don’t follow average GDP, can be misleading.
Emerging middle class in tranditionally poor markets.

Demography - age, birth rate, language, religion, urban/rural.

Consumer Tastes - Quality, colour, style

Use: One product can be used for different things.

In Industrial Products: by level of sophistication. In developing nature, investment in infrastructure is higher than average.

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33
Q

Differences between consumer and industrial markets

A

Consumer products : use, eat, wear, no skill

Industrial Products: Operate and maintain to produce other things. Often requires skill. BOT contracts - build, operate, transfer.

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34
Q

Costs of exporting include:

A

Transport
Distribution
Commissions
Tariffs

At higher price point is it still worth it?

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35
Q

What are the main questions to consider when choosing a market to go into?

A

Whats happening in similar countries?
What are the prospects for deregulation?
What are host gov policies and programme?
What is the position of local competitors?

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36
Q

How do you entire a market that has been identified?

A

4 Ps!

Product - has to be specialized most likely.
Price - has to be competitive
Place - distribution challenges depend on country
Promotion - After sales support more difficult outside of home country.

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37
Q

How are the channels of distribution than at home?

A

More multi-layered and complex.
In developing countries, limited choice in agents
Vital to choose the right one, can’t switch
Channel also serves in reverse

Key Issue: Ownership of goods throughout the distribution channel.

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38
Q

Factors that impede trade:

A

Natural Factors - transport, distribution, promotion, culture.
Government imposed factors - quotas, financial, localization, tariffs
Physhological distance: enter markets most similar to home first.

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39
Q

What are the advantages of choosing a good agent?

A

Knows the market
Access
Government contacts
Operations in more than one foreign market
Production capabilities in multiple products
Supply some capital

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40
Q

How is counter trade used and what is the different types?

A

Various devices and techniques to get around payment or currency problems.

Barter 
Counter Purchase or re-investment
Contract to purchase part or all output
Production sharing
Industrial Offset - some portion to be assembled locally.
Switching - balancing benefits across multiple countries.
Unblocking funds for approved purposes 
Debt for Equity swaps
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41
Q

How does a Letter of Credit Work?

A

A banks promise to pay issued by a bank at the request of an importer. Bank agrees to pay an exporter upon presentation of document specified. Reduces risk of non completion.

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42
Q

What are the elements of a true LC transaction?

A

Must receive fee or proper consideration for LC

Contain a maturity date

Bank commitment must have stated max

Banks obligation to pay must only arise only on presentation of specific documents.

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43
Q

What is a draft and how does it work?

A

Also known as a Bill of Exchange, instrument normally used in commerce to effect payment.

Simply an order written by sller instructing importer or its agent to pay a specified amount of money at a specified time.

Initiating the draft - maker, drawer - normally the exporter. Receiving - drawee.

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44
Q

What is a bill of lading?

A

Issued to exporter by a common carrier transporting merchandise. It is a receipt, a contract, and a document of title. Are either straight or to order, must be payable to order or to bearer.

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45
Q

What is the mix in sourcing?

A

Sources of Ideas: R&D
Sources of product: Manufacturing
Source of Market: Marketing

ALL need to work together to succeed. Globalization helps as each activity can go wherever it makes the most sense.

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46
Q

What are some limitations on international product life cycle theory?

A

Faster product development, shorter innovation lead times reduces advantage of polycentric approach

Predicting developments of new/better sources during PLC gives shrewder companies an advantage

Actively managing resource deployment on a global basis can give company pre emptive first mover advantage.

47
Q

What are the internal conflicts of Marketing, Production and R&D?

A

Marketing dominated:Product Modification
Production Dominated:Excessive Product Standardization
R&D: Over designed - too complex, too expensive, too much delay to market.

48
Q

Trending in Sourcing Strategy include:

A

Decline in Importance of XR

Effects of Excess capacity - especially in old industry - steel, autos, newsprint, chemicals.

Changes in Intl trade infrasturcture - growing mgmt skill and expertise.
Transportation - intermodal, scheduled liners, air freight costs have come down a lot.

Many Logistic companies to help.

Communication
New financing options - countertrade
More sources and shifts in location
Enhanced role of purchase manager

49
Q

What are some trends in global manufacturing?

A

Old - Manu at home, export everywhere
New - Manu everywhere, sell everywhere.

Set up complete factories in foreign markets
Set up factories for components then supply factories from there.

50
Q

What are some of the criticisms of the US in intl trade?

A

Dominated by marketing and finance - inadequate

Parents companies force home systems and procedures on intl subsidiaries whether they fit or not.

51
Q

Concept of the Value Chain:

A

Sequence of all activities from product design, resource acquisition, inbound acquisition, manufacturing and assembly, promotion, sales, distribution, all of which add final value.

Support with : HR, Tech, IT, Accounting.

52
Q

Steps in Value Chain Analysis

A
  1. Identify the separable links in the Value Chain
  2. For each link, do we have any comp advantage?
  3. What are the transaction costs between links? Negotiation, monitoring, risk
  4. Determine comparative advantage of countries/locations relative to each link of the chain, associated transaction costs.
  5. Build sufficient flexibility to cope with changes.
53
Q

What are strategies to Manage R&D?

A

Focus on both process and product tech.

Production can define R&D that in turn defines Production.

54
Q

Ways of Managing production/marketing interface

A

Standardize core component

Group products into design families to gain economies of scale

Universal product with all features

Universal product but different positioning in different markets.

55
Q

What are the logistics of Sourcing (Intra-firm vs. Outsourcing)?

A

Intrafirm: Vertical integration, higher mgt complexity, slow response time.

Outsourcing: Focus on Core competencies, lose contact with technology, design, skills

Which one? Use alliances, blend, integrate.

56
Q

What is culture?

A

Culture: The complex whole which includes knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired by man as a member of society.

57
Q

What are the characteristics of a culture?

A

Social
Learned
Normative
Consistent (for Survival)

58
Q

What is the influence of culture on preception, relationships and behavior?

A

The manners of scarcity and poverty
Perception of the physical world
Class structure - seems to be universal, each divided in some way.

59
Q

Culture and Management is illustrated by Hofstede:

A

Power Distance - degree to which social inequalities are emphasized.
Individualism
Uncertainty Avoidance
Masculinity/Femininity

Economic development spurred cultural change.

60
Q

What is there to be said about the interdependence of cultural factors?

A

You cannot change one factor in isolation. They are all connected, if you change one, others with change.

61
Q

Development causes what social problems?

A

Role conflict between existing roles goes up
New roles can generate new types of conflict
Redistribution of wealth creates a power struggle.

62
Q

What is the theory of Utilitarianism?

A

if a decision is creating value for a large number of people then it is an ethical decision
This theory has gone out of favour with many thinkers.

Can promote illegal/unethical behavior such as bribes. Murdering local officials of a community ran by a drug cartel even though the community is doing well probably isn’t right.

63
Q

What is contractarianism?

A

Follow the law of the land. Do not do any thing that is not permissible by the law. Do the right thing by the law and the contract signed by you.

64
Q

What is Pluralism?

A

It says that all of us in our hearts know what is the right thing to do. Each person should be treated with respect and given a benefit of the doubt. Also the imperative should to rehabilitate and not to punish.

65
Q

What are the four most common unethical decisions?

A

1) Implicit form of prejudice.
2) bias that favors ones own group
3) conflict of interest
4) over-claiming of credit

66
Q

What are the ways we can fix the problem of unethical behavior?

A 
Accept the fact you will act unethically sometimes
Be vigilant about your own behavior
Collect Data
Shape your environment
Broaden your decision making
67
Q

How are multinationals developing? On what dimensions?

A

Geographic Expansion

Line of Business - Start with a line of business that has a strong competitive advantage over domestic companies.

Functional Migration - scope of functions performed by local sub increases over time.

Can be continuous, over happen in steps over time.

68
Q

What is Reverse Evolution?

A

Restructuring, re-engineering. A company can become to big to efficient, need to reduce, simplify.

Usually used in reference to old MNCs. Task: identify areas for scale and scope economies. Actively leveraging knowledge and experience across dimensions.

69
Q

A Global Manager has to do the following things:

A

Sometimes a manager can have the right strategy but not implement it properly. Global manager needs to have knowledge and skills + relational and cross cultural skills to be effective.

70
Q

How are executive traits changing?

A

Old: Style - Autocratic, authoritarian. Focus - Ethnocentric, D/M Basis - Economics of firm.

New: Style - Participative, learner/teacher.
Focus - Multi-Cultural
D/M Basis - Breadth of Stakeholders

71
Q

What are the skills of global manager?

A

Global Strategic Skills - awareness of intl relations and affairs, global markets and XC rates, Global economies of scale vs. local market responsiveness.

Ability to manage change and transition: recognize environment is dynamic, not static.

Manage cultural diversity: cultural determinants of product use, popular culture and labor relations, home culture vs. host culture. Ethno, Poly, Regio, Geo centric. Ethno - home office with expats abroad, Poly - home office with decentral, local labor. Regio - maximize regional similarities. Geo - Global Orientation.

Abiility to design and function in flexible organizations. Two aspects: A) ability to work in different cultures/structures. B) ability to respond to turnbulent nature.

72
Q

What are some dimensions of communication abilities?

A

Not only technically, but also verbally, read people, body language, etc.

Ability to learn and transfer knowledge: me to them, them to me, region to region, region to HO.

73
Q

What are some of the thing global managers must do to be successful?

A

Must adapt - both manager and family
Must have expertise
Must interact with, try to understand, local culture and its people.

Sometimes working aborad unfits you for working at home.

73
Q

What are some of the thing global managers must do to be successful?

A

Must adapt - both manager and family
Must have expertise
Must interact with, try to understand, local culture and its people.

Sometimes working aborad unfits you for working at home.

74
Q

Growth of international structure steps:

A
  1. Start with exporting - by accident or adhoc
  2. Growing importance of export leads to establishment of international division.
  3. If local diff is more important - go to an area structure. Higher influence on decision making. Becomes replica.

Problems: High autonomy can lead to comm problems, Exhibits MNC learning. Challenge to home authority, low volume, high costs, lack of scale to warrant some activities.
3b. Product standardization dominant - leads to organizing on product lines. Each division becomes own entity.

75
Q

Growth of international structure steps:

A
  1. Start with exporting - by accident or adhoc
  2. Growing importance of export leads to establishment of international division.
  3. If local diff is more important - go to an area structure. Higher influence on decision making. Becomes replica.

Problems: High autonomy can lead to comm problems, Exhibits MNC learning. Challenge to home authority, low volume, high costs, lack of scale to warrant some activities.
3b. Product standardization dominant - leads to organizing on product lines. Each division becomes own entity.

76
Q

What are some of problems with locally structured company?

A 
Do not have much autonomy
Inflexible
Loss of contact by HO with other markets
Low Local Autonomy
All activities dominated by home office.
77
Q

What is the breadth and depth of mgmt talent, especially at the level of the affiliates?

A

Slide Global organization structure - 10

78
Q

What are some of the main goals of multinational companies in JVs and dealing with their local subs?

A

Two way flow of ideas
Free and frequent movement between offices
Use of local board of directors
A global perspective both at HO and in the field.

Maximization over the whole org not over individual elements.

79
Q

What is the breadth and depth of mgmt talent, especially at the level of the affiliates?

A

Slide Global organization structure - 10

80
Q

Characteristics of Markets (Environment)

A

EEC - growth of poltical centralization, expansion to the east.

China - introduced market economy, still hold tons of control.

SE Asia - extraordinary growth, collapse of dictatorships and cronyism

Japan - Almost a decade in recession from speculation and bad lending. Hard time letting go of old ways.

India - Market reforms continuing under the nationalist BJP government.

Central and South America - collapse of military rule. Emerging middle class with major political voice.

Africa - Still a mess. North - dictators, very few true democracies.

81
Q

What are the effects of terrorism after 9/11?

A

Yes - Israel, RSA, USSR, Ireland, FBI, Kenya. Inherrant to liberation movements.

State terrorism in Haiti, Chile, China, Cambodia.

Terror can be effective in ordering the members of society.

82
Q

What are the three main issues for identifying markets for MNE?

A

Which regions to penetrade?
Which industries or markets to enter?
How to coordinate activities across such a vast expanse?

83
Q

What are the industry pressures for international companies?

A

Globally integrated bs. Locally Responsive
Centralized products vs. decentralized
Uniform vs market specific products
Uniform marketing vs market specific
Promotion vs. Market specific
Reporting and control vs. Market specific

84
Q

What are the industry factors influencing in the increase in Intl Trade?

A

Universal customer needs
Global customers
High investment intensity
Pressure for cost reduction - seek lowest cost of supply.

85
Q

What are the pressures towards localization?

A

Tariffs and trade barriers
Cultural Differences
Nationalism
Tribalism

86
Q

How can the interaction of government effect the expansion of a company into intl trade?

A

Governments compete for location
Make use of transfer pricing to minimize tax.
Carrot and Stick technique vs. Gov
Governments can place demands on investing companies like : level of tech, quantity of training, level of investment, rescrictions on ownership, capital flows and payments of dividends.

87
Q

How can the interaction of government effect the expansion of a company into intl trade?

A

Governments compete for location
Make use of transfer pricing to minimize tax.
Carrot and Stick technique vs. Gov
Governments can place demands on investing companies like : level of tech, quantity of training, level of investment, rescrictions on ownership, capital flows and payments of dividends.

88
Q

What are the generic business strategies?

A 
Differentiation
Cost Leadership
Cost Leadership and Differentiation
Focus cost leadership
Focus differentiation
89
Q

How can a company determine what international strategy to adopt?

A

When global and local pressures are both high - transnational

Global high, local low - globalization

When both low - International

When both are medium - regional

When global is low and local high - multi-domestic

90
Q

What are the reason for globalization pressures to be high?

A 
High cost of tech dev
Fast paced product life cycle
Universal demand for standard products
Cheaper transport
Cheaper comm
Governments opening up globally
Talent and customer available globally.
91
Q

What are the rason for high levels of localization?

A 
Different Economic conditions
political conditions
legal environment
culture
lack of infrastructure
Social constitutions
Incompetence of local managers
REsistance to change for locals 
Resource availability or lack there of.
92
Q

What are the motivations for a JV?

A

Existing - New : take existing into new
Existing - Existing : Strengthen existing business
New-New: Diversify into new businesses
New - Existing : bring foreign products into existing markets.

93
Q

What are some of the operation questions in JVs?

A

Who does what?

Product design
Technology to be used
Markets to be served
Suppliers to be used
How to handle mgmt problems
94
Q

What are the characteristics of functional JVs?

A

Marketing - Share sales force and distribution networks.
R&D - problem of quality of inputs - how to share outputs.
Production - achieving economies of scale not otherwise possible, access to tech and mgmt know how, reduce financial risk.

95
Q

In the JV Matrix, what are the characteristic of Existing/New?

A

Use JV to test market. If proven establish sub there. Follow customers to markets
Invest in future growth.
Overcome government regulation
Overcome political connections barrier

96
Q

In the JV Matrix, what are the characteristic of New/Existing?

A

Improve production
Broaden product line
Tax Advantages

Problems - Question of market growth
New product means more capital, mgmt, commitment.

97
Q

In the JV Matrix, what are the characteristic of New - New

A

Don’t do it, usually fails.

98
Q

What are the keys in making a JV deal?

A

Need a contract but not the key.
Can have shotgun divorce clause

A successful JV with have autonomy over parents, may need to renegotiate goals.

99
Q

What are the keys in making a JV deal?

A

Need a contract but not the key.
Can have shotgun divorce clause

A successful JV with have autonomy over parents, may need to renegotiate goals.

100
Q

What is a license?

A

A strategy for technology transfer. An agreement where the licensee gets to use its technology, patents, trademarks, design, processes, know-how, IP for a fee.

101
Q

What is franchising?

A

A type of Licensing where you are basically licensing an entire business plan. Maintain control over every aspect - standards, quality, product design, pricing, packaging, etc.

102
Q

What are the reasons for licensing?

A

Lack capital, test the market, get money for an invention outside our core comp, local market may be too small, avoid/minimize political factors, possible high rate of obselescence.

103
Q

What are some of the risk in licensing?

A

Will the licensee become a competitor?
Possible development of technology further then it is now?
Will licensee protect image.quality/service standards.

104
Q

What are the advantages of being a licensee?

A

Quick
Cheap
Low Risk

105
Q

What are some of the problems for the licensor?

A

What to charge
Does that maximize profits?
What about getting feedback
Lose control over use of the product

106
Q

What are the major elements of a license agreement?

A

Always get yourself a good lawyer from other jurisdiction
Specify what law governs
Specify how disputes will be resolved
Consider using arbitration rather than courts.

Trust is better than paperwork. Know who you are dealing with.

107
Q

What are the major elements of a license agreement?

A

Always get yourself a good lawyer from other jurisdiction
Specify what law governs
Specify how disputes will be resolved
Consider using arbitration rather than courts.

Trust is better than paperwork. Know who you are dealing with.

108
Q

What are two major source of political intervention?

A

Economic and political environment of the intervention decision

Nature and strength of interest groups within the host country.

109
Q

What are the four types of politically factors?

A

Nationalism
Dependency theory -
Ideology
Colonialism

Interest groups: The ruling political party, domestic controllers of business, political groups who are outside the government, the domestic managerial class.

110
Q

How does gov intervention effect companies differently?

A

Enforcement is selective and discriminatory.
Timing: once gov has annouced its plans, its too late. Must effect gov intervention BEFORE it happens through connections, lobbying, etc.

111
Q

How much power does host government have?

A

Ability to replace the products/services normally supplied by MNE. Control over local subs access to everything.

112
Q

What are the two strategies for MNEs to defend against government intervention?

A 
Maximize subsidiary bargaining power:
Stay ahead of host nation
Generate exports
Become embedded in the country
Develop connections
Keep a low profile.

Parent can help by: Enlisting political support in the home county. Control raw materials
Develop executives who are politically adept.

Intl mgmt (2 decks)

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