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Lecture/seminar/reading content notes > Business,Management and Economics - Lecture/seminar notes > Flashcards

Business,Management and Economics - Lecture/seminar notes Flashcards

(From slides/readings)

1
Q

What is an organisation?

A

a systematic arrangement to achieve specific purposes

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2
Q

Theories of organisation…

A

ownership, size, industry, objectives and stakeholders.

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3
Q

Intrinsic motivation…

A

Motivation from relation between worker and task

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4
Q

Extrinsic motivation…

A
  • External factors e.g. perks, recognition etc
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5
Q

Perfomance goal….

A

Aims at receiving good judgement from peers or authority figures

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6
Q

Learning goal…

A

Involves using feedback to improve competence and personal skills

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7
Q

Elton Mayo (1880-1949)

A
  • Believed workers motivated by working conditions, others workers’ skills + financial incentives.
  • Findings showed changes in working conditions and financial incentives had little impact on motivation.
  • Personnel department est. to provide social and sporting facilities to informal groups for employees
  • Toshiba + John Lewis use this
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8
Q

Maslow’s hierachy of needs…

A
  • Physiological needs
  • Safety and security needs
  • social relationship needs
  • Self-esteem needs
  • Self-actualisation needs
  • HOWEVER, some hierachy lvls don’t exist for all workers + Business objectives may be unclear
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9
Q

Clayton Alderfer’s ERG theory…

A
  • Existence needs (like Maslow’s Physiological and Safety Needs)
  • Relatedness Needs (Like Maslow’s Social and Esteem Needs)
  • Growth needs (Equivalent to Maslow’s Self-Actualisation)
  • ERG theory allows more flexibility + People might not progress through needs
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10
Q

Herzberg’s two-factor theory…

A

Hygiene Factors:
- Prevent job dissatisfaction but do not necessarily lead to satisfaction.
- Company policy, supervision, working conditions, interpersonal relations, salary, status, and job security.

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11
Q

Douglas Mcgregor’s theory…

A

Theory X:
- Assumes workers inherently dislike work and are primarily motivated by money.
- Requires authoritarian management, using control, threats, and fear to drive productivity.
- Autocratic style of leadership
- HOWEVER, not much delegation and can lead to conflicts
Theory Y:
- Assumes workers are self-motivated, seek fulfillment, and enjoy contributing to the organization.
- Encourages a supportive management approach, focusing on inclusion and encouragement.
- Democratic leadership style
- Theory X believes people money motivated + Theory Y believes people highly motivated by autonomy and responsiblility

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12
Q

Cons of Mayo’s theory…

A
  • Social factors may overshadow other motivational factors
  • Social interaction important, but not the only driver of motivation
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13
Q

Cons of Maslow’s hierachy of needs…

A
  • Cultural and individual differences have led to eligibility of the hierachy for all
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14
Q

Cons of Herzberg’s two-factor theory…

A
  • Not all workers respond the same way to hygiene/motivational factors
  • Does not address intrinsic motivators
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15
Q

Cons of Mcgregor’s X and Y theory…

A
  • X may be beneficial for just routine, structured jobs
  • Y may be beneficial for creative/complex tasks
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16
Q

Performance Management:

A
  • A systematic process to ensure that a set of activities and outputs meets organization’s goals effectively and efficiently
  • e.g. setting standards, monitoring progress etc
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17
Q

Legal/Organisational frameworks…

A
  • performance management
  • disciplinary and grievance
  • conduct and capability
  • recruitment
  • learning and development
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18
Q

Top (high-level) Management

A

Managers in positions such as president, CEO, CFO and vicepresident who make decisions regarding the firm’s long-run
objectives.

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19
Q

Middle Management

A

Managers who are often responsible for the firm’s short-term
decisions.

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20
Q

Supervisory (first-line) Management

A

Managers who are usually highly involved with the employees
who engage in the day-to-day production process.

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21
Q

Functions of a manager…

A
  1. Planning
  2. Organising
  3. Staffing
  4. Directing
  5. Motivating
  6. Controlling
  7. Co-ordinating
  8. Communicating
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22
Q

Conceptual skills (analytic skills)

A

The ability to understand the relationships among the various tasks of a
firm.

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23
Q

Interpersonal skills (communication skills)

A

The skills necessary to communicate with customers and employees.

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24
Q

Technical skills

A

Skills used to perform specific day-to-day tasks

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25
Q

Decision-making skills

A

Skills for using information to determine how the firm’s resources
should be allocated.

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26
Q

Laissez-Faire Management

A
  • The manager delegates more authority
  • employees; the
    leader’s role is less dominant, and staff manage their own
    areas of the business.
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27
Q

Taylor’s Theory of
‘Scientific Management’

A
  • Select workers to perform a task.
  • Observe them, then note the key elements.
  • Record the time taken to do each part of the task.
  • Train all workers to do the task in the quickest way.
  • Supervise workers to ensure they use this method.
  • Pay workers on the basis of the results.
  • SOLE MOTIVATION – MONEY
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28
Q

General Skills for Managers

A
  • Conceptual skills
  • Interpersonal skills
  • Technical skills
  • Political skills
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29
Q

Potential Limitations of Maslow’s Theories…

A
  • Minimal statistical evidence.
  • Each individual may require different needs in a different order.
  • Some people may require ‘esteem’ needs satisfaction before ‘social’ needs satisfaction.
  • Self-actualisation might not be for everybody.
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30
Q

Potential benefits of Maslow’s theories…

A

Helps managers understand the behaviour of their employees.
Helps managers to provide the right financial and non-financial motivation for their employees.
Helps to increase efficiency, productivity and profitability.

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31
Q

Rationale for Managing Performance within Organisations

A

Improving and sustaining organisational performance
Productivity
Driving quality
High performance working
Organisational agility
Well-being

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32
Q

Rationale for Managing Performance within Organisations

A

Work-life balance
Identifying talent and potential
Individual needs and capabilities
Preventing poor performance from escalating
Problem resolution
Punctuality and attendance

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33
Q

Inclusivity…

A
  • Peoples differences are valued
  • Everyone feels they belong without having to conform
  • Fair policies and practices enable a diverse rangle of people to effectively work together.
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34
Q

Background to diversity & inclusivity…

A
  • not enough women + non-Caucasians in promiennt positions at the workplace
  • More social training was provided for people in management levels -> Case came where all groups had to learn from other groups, not one group learning about all other groups
  • Diversity and inclusivity has grown -> As workforces have became more globalised

(Week 3 Lecture)

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35
Q

Critcisms of diversity & inclusion…

A
  • Some companyies involved just to be a part of recognised Diversity Management lists, and to meeting govt. quotas
  • Quota policies may have effective in short-term
  • Some people feel they are being unfairly dismissed -> To meet company quoatas -> Became form of exclusion or ‘reverse discrimination’ + Some workers feel ‘tokenised’
  • Some critics argue it should purely be based on merit, not factors e.g. race or creed
  • ## Tension may be caused by employees as ethnic groups may be hired, but some may this is to meet quotas
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36
Q

Benefits of Diversity & Inclusion…

A
  • More views etc
  • Equality Act (2010) -> Gives everyone the right to be treated fairly

(Week 3 Lecture - 2024)

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37
Q

Managing diversity & inclusion…

(Overall strategy)

A
  • Diverse workforce needs an inclusive environment
  • Managing diversity is a continuous process of improvement
  • Merit basis of all decisions for recruitment and development
  • Being alert to the influence of conscious and unconscious biases.
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38
Q

Communcation for diversity & inclusion…

A
  • Develop open culture for good communication channels
  • Ensure appropriate channels foremployees’ voices, different groups can access them easily

(Week 3 lecture - 14/10/2024)

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39
Q

Measure review for diversity & inclusion…

A
  • Regularly audit, review and evaluate progress
  • Use employee surveys -> To see if policies work for all
  • ## Network with others inside and out the organisation -> To keep updated and to share learning

(Week 3 lecture - 14/10/2024)

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40
Q

Questions on diversity & inclusion…

A
  • What % improvement is required?
    How much support is there for quota policies?
  • How can quota policies be communicated or improved?
  • How to best to implement policies and create appropraiate legal adn organisational requirements
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41
Q

Health and Diversity & Inclusion…

A
  • Health checks
  • Health insurance protection
  • Personal safety training
  • Conflict resolution training
  • Training line managers etc

(Week 3 Lecture - 14/10/2024)

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42
Q

support wellbeing in the workplace - values and principles

A
  • Clear missions and objectives building trust
  • Coporate social responsibility (CSR), community investment, volunteering etc
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43
Q

support wellbeing in the workplace - collective/Social

A
  • Workers’ involvement in the decision-making process
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44
Q

support wellbeing in the workplace - collective/Social

A
  • Performance development plans (PDPs)
  • Open and collaborative culture
  • Innovation workshops
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45
Q

Points to Support Wellbeing
in the Workplace - financial wellbeing

A
  • Retirement planning
  • Employee financial support
  • Employee assistance programmes which offer debt counselling
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46
Q

What is an organisation?

A

a systematic arrangement to achieve specific purposes

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47
Q

Theories of organisation…

(Week 4)

A

ownership, size, industry, objectives and stakeholders.

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48
Q

Define leader…

(Week 4)

A
  • ## An individual within a group or an organisation who wields the most influence over others
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49
Q

Define leadership…

(Week 4)

A
  • The process whereby one individual influences other group members toward the attainment of defined group or organisational goals
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50
Q

Leaders & managers…

(Week 4)

A
  • Leaders are primarily responsible for establishing a mission
  • Managers primarily responsible for implementing that mission through others
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51
Q

Wilson’s leadership skills…

(Week 4)

A

Technical expertise
- Clarification of goals and objectives
- Problem solving
- Imagination and creativity

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52
Q

Leadership Research…

(Week 4)

A
  • (1930s-1950s) Personality
  • (1960s) Behaviour
  • (1970s) Focuses on situational variables
  • (1980s) Emergence of the ‘new paradigm’
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53
Q

Leadership theories…

(Week 4)

A
  • Personality-based
  • Situational
  • Transactional
  • Transformational
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54
Q

Theories of Leadership - traits

A
  • Personality
  • Dominance and personal presence
  • Charisma
  • Self confidence
  • Achievement
  • Ability to formulate a clear vision
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55
Q

Six traits of charismatic leaders…

(Traits of charasmatic leaders…)

(Week 4)

A
  • Vision and articulation
  • Sensitivity to others’ needs
  • Environmental sensitivity
  • Unconventional behaviour
  • Taking personal risks
  • Upsetting the status quo
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56
Q

Situational Leadership…

(Week 4)

A
  • When an organisation’s leader or manager must adjust their style to fit the followers’ development level.

Directing (dependent) -> Coaching -> Delegating (independent)

57
Q

Style requirements of situational leadership…

(Week 4)

A
  • Insight
  • Flexibility
  • Trust
  • Problem solving
  • Coach
58
Q

Transactional leadership…

A
  • When leaders promote compliance by followers, via punishments and rewards
59
Q

Transactional leadership focuses…

(Week 4)

A
  • Focuses on short-term goals
  • Favours structured policies and procedures
  • Thrives on following rules and doing things correctly
  • Revels in efficiency
  • Tends to be inflexible
  • Opposes change
  • Focusses on management of organisation
  • Manages current issues and problems.
60
Q

Transactional Leadership Style…

A
  • Motivates followers by appelaing to their self-interest
  • Exchange process -> e.g. business owners exchange status and wages for thw work effort of employee
  • Focuses on acheiving business goals and having good relations with workers, in exchange for desirable rewards
  • Encourages leader to adapt their style and behaviour to meet followers’ expectations
61
Q

When to use transactional leadership…

A
  • Leader wants to be in control
  • Short-term relationships
  • When there are approaching deadlines that must be met.
62
Q

Transformational Leadership…

A
  • leadership approach that causes change in
    individuals and social systems
    enhances the motivation, morale and performance of
    followers through a variety of mechanisms
63
Q

Transformational Leadership qualities…

A
  • Very well-organised and expect their followers to be creative.
  • Team-oriented and expect followers will work together to create
    best possible results.
  • Respected and, in turn, respects followers.
  • Acts as team coach . He or she provides training and motivation to reach the desired goals.
  • Responsible for team, but also delegates responsibility to team
    members.
  • Engenders respect through rapport and personal influence.
64
Q

Transformational leadership style…

A

Charismatic and visionary.
* Inspire followers to transcend their self-interest for the
organisation.
* Appeal to followers’ ideals and values.
* Inspire followers to think about problems in new or different
ways.
* Common strategies used to influence followers include vision
and framing

65
Q

When to Use Transformational…

A

When leaders want members to be an active part of the
organisation and have ownership to it.
* When leaders are building a sense of purpose.
* When the organisation has a long-term plan.
* When people need to be motivated.

66
Q

Leadership flow things…

A
  • Delegating
  • Supporting
  • Coaching
  • Directing
67
Q

Situational Leadership –
Style Requirements

A
  • Insight
  • Flexibility
  • Trust
  • Problem solving
  • Coach
68
Q

Difference between transformational and transactional leadership…

A
  • Transactional promotes complaince via punishments and rewards
  • Transformational keeps employees motivated in the short term via punishments and rewards
69
Q

what is a business?

-

A
  • The organised effort of individuals, in order to provide and produce goods and services to meet the needs of society.
70
Q

Two categories of business…

A

➢profit making (e.g., manufacturers, retailers, transport
and banks).
➢non-profit making (e.g., schools, hospitals and charities).

(Some non-profit organisations are a combination of profit
making and non-profit making ventures)

71
Q

What happens to profit in business?

A

income generated from profit related activities can then be
used to to reinvest in the organisation e.g. business expansion and R&D

72
Q

When looking at different business contexts…

A
  • Different contexts of business and different elements are still interrelated + It can still operate in the way you want it to (depending on how it is looked at)
73
Q

One context of a business…

A
  • Organisation -> Strategy -> Activities
  • Environment
74
Q

Organisation…

(What its organised into)

A

▪ Production
▪ Sales
▪ Marketing
▪ Customer Service
▪ Administration
▪ Research and Development (R&D)
▪ Finance

75
Q

Strategy…

A
  • Consists of overall aims and objectives
  • Usually strategy is determined by the senior management of the business (After careful analysis of stakeholders, business, environment and how things are managed).
    Strategic decisions will determine the overall
    direction of the business, taking into account its capabilities and constraints.
76
Q

Strategy (consideration things)…

A
  • A business considers how it wants to be seen in the marketplace
  • Overall strategy of business is achieved via collective performance of various activities and functions within the business
77
Q

Another contxt of business (IPO)

A

Inputs - Materials, Labour, Methods, Finance, Tech
Process - Strategy Formulation, Innovation, Operations, Marketing, HR management, Finance
Goods/Services - Profit, Waste, Information, Job (dis)satisfaction, Economic Growth

78
Q

Business Activities…

A
  • Manufacturing goods
    ▪ Distributing products
    ▪ Selling goods to customers
    ▪ Advertising and promoting products
    ▪ Maintaining records of income and expenses
    ▪ Managing the workforce
    ▪ Dealing with customer queries and complaints
    ▪ Developing and creating new products
79
Q

An area of analysis in a business environment (PESTLE)…

A
  • Political
  • Economic
  • Social
  • Technological
  • Legal
  • Environmental
80
Q

Business Function: Factors

A

▪ Integrated transport systems
▪ Improved communication
▪ Flexible production
▪ Lower distribution costs
▪ Common business language
▪ Currency markets
▪ Legal systems
▪ Market potential

81
Q

Business Function: Cultural Issues…

A
  • Social mobility
  • Employment flexibility
  • Common business culture
  • Customer diversity
  • Shared knowledge and skills
  • Employee relations strategies
  • Social media growth
82
Q

How does the World Bank define globalisation?

A
  • The global circulation of goods, services and capital, but also
    information, ideas, and people
  • Albeit with large cyclical variations

(Has become more priminent in recent decades)

83
Q

Examples of business institutions…

A
  • World Trade Organisation (WTO)
    ▪ Leading stock markets
    ▪ Central banks
    ▪ Regional trading blocs
84
Q

Globalisation things…

A
  • World economy is now more interrelated
  • Increased international trade and more multinational corporations (MNC’s).
  • Improved tech allows better communication.
  • Increased flow of business resources e.g. goods, services, workers etc.
  • More international trade and MNCs.
85
Q

Industrial revolution stages…

A
  • (1700s) Steam
  • (1800s) Electricity
  • (1900s) Computing
  • (Today) Connected
86
Q

Globalisation (investment things)…

A
  • More investment in -> joint ventures (JV’s),
    mergers and acquisitions (M&A’s) and
    multinational corporations (MNC’s).
  • Better R&D from increased sharing of innovation
  • More business may manufacture in overseas countries
87
Q

Globalisation drivers…

A
  • Growth of international trade
    ▪ Spread of international governance
    ▪ Finance and capital spread
    ▪ Technological innovation
    ▪ Diffusion of information and communication technology
88
Q

Some Business Drivers for Globalisation…

A
  • Growth of Foreign Direct Investment (FDI)
  • Increased multinational corporations (MNC’s) and
    multinational enterprise
  • Improving cost efficiencies
  • Innovation
  • Saturated home markets
89
Q

The Principle behind Expansion…

A
  • Principle is in synergy, growth and intangible assets (human, customer and structural capital)

(2 + 2 = 5)

(key principle behind buying a company is to create shareholder value over and above that of the sum of the two companies)

90
Q

Organic growth (AKA internal growth)…

(The Growth of Firms)

A
  • Happens when a business expands its own operations rather than relying on takeovers and mergers.
91
Q

Internal expansion…

(The Growth of Firms)

A
  • Increasing production from in the business -> Internally increasing productive capacity
92
Q

Fastest route for a firm’s growth…

A
  • External growth – through joint ventures (JV’s) mergers
  • Acquisitions/takeovers (M&A’s)
93
Q

Joint Ventures (JV’s)…

A
  • When two or more companies agree to pool resources to accomplish a specific task (partnership).
  • This often occurs with a local business to enter a foreign market.
94
Q

Merger…

A
  • Joining together of two or more firms under common ownership or more firms join together to become one.
  • Multiple companies agree to integrate their operations into a single entity in which there is shared ownership, control and profit

(Mergers are mutual!)

95
Q

Acquisition/Takeover…

A
  • When a firm buys control of another, when one company buys another company.
  • This can be done either by the purchase of the assets ofthe company or by acquiring ownership over 51% of its paid-up share capital

(Does not need to be mutual!)

96
Q

Some reasons for Internal Growth…

(Week 6- Business expansion)

A
  • Finding new markets (i.e., exporting).
  • Growing a customer base through marketing.
  • ## The advantages of economies of scale: large scale production results in lower unit (average) costs (cost per unit).
97
Q

Internal economies of scale…

A
  • Managerial
  • Risk-bearing
  • Financial
  • Technical
  • Marketing
  • Purchasing
98
Q

External economies of scale…

A
  • Location/Transport links
  • Skilled Labour
  • Organisation Infrastructure
  • Reputation of Area
99
Q

Some Underlying Rationales…

A
  • Strategic rationale
  • control in the chosen sector
  • Speculative rationale
  • Management failure rationale
  • Financial necessity
  • Political rationale
100
Q

Merger drivers…

A
  • A requirement for specialist skills and/or resources.
  • National and international stock markets.
  • Globalisation drivers + Diversification drivers.
  • Industry and sector pressures.
  • Capacity reduction + Vertical integration.
  • Increased management effectiveness and efficiency.
  • To acquire a new market or consumer base.
  • To buy into a growth sector.

(In essence, the motives of cost, profit, market power, risk and management).

101
Q

Horizontal Mergers…

A
  • Two companies that are in direct competition and share the same product lines and markets.
  • Branding may be an interesting consideration here
  • Process of communicating a unique selling proposition, such as logos and mascots, which sets a product or service apart from its competition

(For example, two car manufacturers or drinks suppliers)

102
Q

Vertical Mergers…

A
  • involves acquiring a business in the same industry but at different stages of the supply chain -> (supply chain describes the process by which production and distribution gets products to the final customer)

(Different stages up and down…)

For example, a supplier and a company:
Film distributors owning cinemas.
Brewers owning/operating pubs (forward vertical) or buying hop farms (backward vertical).
Drinks manufacturers integrating with bottling plants

103
Q

Conglomeration/Diversification…

A
  • When a company buys another firm in an unrelated industry
  • Two companies that have no common business area

For example:
Samsung – the electronics giant also makes military hardware, apartments, ships and they also operates a Korean amusement park!
Facebook buys WhatsApp

104
Q

Why Mergers Fail…

A
  • Mislead value for investment
  • Lack of clarity in the integration process
  • Mismatch in culture
  • Poor communication
  • External factors
  • Negotiation errors
105
Q

Pros of mergers for consumers, firms and economy…

A
  • Generation of economies of scale.
  • Lower costs passed onto consumers through lower prices.
  • Higher profits invested into new R&D + new tech + new products/services.
    Increased scope of global competition (more exports)
  • Higher shareholders return/profit.
  • Large firms have better access to funding (capital markets) than smaller ones, why?
  • Higher scope for more govt. tax revenues, + better merit and public goods from higher tax revenue.
106
Q

Cons of mergers for Consumers, 
Firms & Wider Economy

A
  • Diseconomies of scale, decreasing returns to scale, law of diminishing returns + Opposite of economies of scale!
  • Benefits may not occur in the long term
  • Cost savings may not materialise, or passed onto consumers
  • Creation of monopoly or oligopoly could lead to consumer exploitation.
  • Attract interest and investigation from Competition & Markets Authorities (CMA)
107
Q

Two short-term measures of financial performance…

A
  • Return on capital employed (ROCE)
  • earnings per share (EPS).
108
Q

Return on Capital Employed (ROCE)…

A
  • indicates how well a business uses its capital (or the assets purchased with the capital) to generate profits.
  • Being a percentage makes it easy to compare the ROCE of different companies.

(Formula: Profit before interest and tax/avg. capital employed x 100%)

(PBIT stands for Profit before interest and tax)

109
Q

Earnings Per Share (EPS)…

A
  • Determines the profits available to ordinary shareholders, expressed per share.
  • Profits after interest, tax and preference share dividends
  • Number of ordinary shares issued
110
Q

Other EPS things…

A
  • This figure states only earnings per share that each owner of ordinary shares might expect to receive.
  • The directors decide whether/how much to pay out as a dividend.
  • Furthermore, to calculate a rate of return for the shareholder, the price that the potential shareholder has to pay to acquire a share must be taken into account.
  • The main weakness of both ROCE and EPS is that they do not correlate directly to the goal of maximising shareholder wealth.
111
Q

EPS formula…

(BMEL)

A
  • PAT/number of ordinary shares

(PAT stands for profit after interest, tax and preference share dividends)

112
Q

ROCE formula…

(Return On Capital Employed)

(BMEL)

A

Profit before interest and tax / Avg. capital employed (x100%)

113
Q

Reasons for establishing an MNC…

Week 7 seminar

A
  • To increase market share.
    To secure cheaper premises and labour.
    Employment and Health & Safety legislations in other countries may be more relaxed.
    To avoid or minimise the amount of tax to be paid.
    To take advantage of government grants available.
    To save on costs of transporting goods to the market place.
    To develop an international brand.
114
Q

MNC things…

Week 7 seminar

A
  • Smart market entry and expansion
  • Winning MNCs tend to begin in a mature market and then expand outward (for example, many companies enter Nigeria before expanding into western African markets).
  • Flexible approach to launching or expanding businesses (JVs, M&As, franchises etc.).
  • Innovative products and pricing
  • Products that are right for local consumers and the local environment.
  • An intimate understanding of consumers and how to meet their needs
  • Keen understanding of customers in individual markets.
  • Brand loyalty can be far stronger in emerging markets.
115
Q

Pros and cons of MNC…

(Accordintg to Haller)

Week 7 seminar

A

Pros:
- Job Creation: MNCs bring employment opportunities to host countries.
- Capital Investment: They infuse significant financial resources into local economies.
- Technology Transfer: MNCs introduce advanced technologies to developing markets.
- Improved Trade Balance: Their operations often enhance the trade balance of host nations.
Disadvantages:
- Repatriation of Profits: Profits are often sent back to the MNC’s home country, reducing the financial benefits to the host.
- Job Displacement: Technological advancements can lead to unemployment in local markets.
- Environmental Concerns: Their operations may contribute to ecological damage and societal issues.

116
Q

MNC things…

Week 7 seminar

A
  • Fast and widespread delivery of goods
  • Inadequate transportation infrastructure is a common issue.
  • Successful MNCs have found creative ways to distribute in rural areas (for example, develop their own distribution networks).
  • A focus on tackling the talent agenda
    MNCs invest in attracting and developing local talent at all levels.
  • Programmes to encourage the personal growth and long-term success of employees.
  • Strong stakeholder engagement
  • Strong relationships with local and regional governments and other community stakeholders.
  • Align their activities with the sustainable-development goals of local leaders.
  • Embed corporate social responsibility into their strategies.
117
Q

Emerging markets MNCs…

Week 7 seminar

A
  1. Nearly 1/3 of Fortune Global 500 companies from G20 countries.
  2. The rise of emerging market multinational corporations (eMNCs) is reminiscent of the emergence of US companies after World War II.
  3. The rise of eMNCs overall could threaten the dominant position enjoyed by the G7 MNCs.
  4. Banking, cars, crude oil production, engineering and construction, logistics, metals, mining, petroleum refining and telecom.
  5. Profit margins for eMNCs are still lower than those of their developed market counterparts in the G7.
  6. Emerging MNCs learned to compete with Western MNCs in their home markets.
  7. By 2025, annual consumption in emerging markets will reach $30 trillion – the biggest growth opportunity in the history of capitalism.
118
Q

SWOT Analysis…

Week 7 seminar

A
  • ASWOT analysisis a technique used to determine and define Strengths, Weaknesses, Opportunities and Threats SWOT.
  • SWOT analyses can be applied to an entire company or organisation or individual projects within a single department.
119
Q

Top 5 Multinational Corporations (MNCs)…

Week 7 seminar - MNCs

A
  1. Microsoft (US); CEO - Bill Gates
  2. Nestle (Switzerland); CEO - Ulf Mark Schneider
  3. Pepsi (US); CEO - Ramon Laguerta
  4. Hewlett Packard (US); CEO - Enrique Lores
  5. Coca-Cola (US); CEO - James Quincey
120
Q

What an MNC is and its functions…

Week 7 seminar - MNCs

A
  • A multinational corporation is a company that operates in its home country, in addition to other countries around the world. + It has one central office in one country -> Co-ordinating management of other offices
121
Q

Some reasons for a business going global…

Week 7 seminar - MNCs

A
  • Profits
  • New markets
  • Financial capital
  • Raw materials
  • Labour costs
122
Q

MNCs and their potential benefits…

Week 7 - MNCs

A
  • This managerial control allows firms to decide how and where to employ resources
  • Decisions are based on global strategies for corporate success rather than the strategies of one country
  • MNCs highlight tensions in an economy -> Or political tensions -> Which may reflect exclusive national territories
123
Q

Types of MNCs…

(TNC and Ethnocentric)

Week 7 - MNCs

A
  • Transnational Corporation (TNC) -> operate
    on a borderless basis -> usually not identified with one national home-> e.g. (McDonald’s & Apple)
  • Ethnocentric: operate with strict headquarter control over foreign operations -> and expect to operate abroad as they do at home -> e.g. (Sony, Panasonic, Harley-Davidson & Hitachi)
124
Q

Types of MNCs…

(Polycentric, geocentric)

Week 7 seminar

A
  • Polycentric -> give foreign operations more freedom, respect market differences amongst countries -> treating them as separate domains in the process -> e.g. (Phillips & John Deere)
  • Geocentric -> seek total integration of global operations without ‘home country’ prejudices -> using senior executives from many countries -> e.g. (McDonald’s, KFC & Viacom)
125
Q

Positive and negative perspective of MNCs…

Week 7 seminar - MNCs

A

Pros:
- MNCs ship capital to where it is scarce.
- They transfer technology and management expertise
from one country to another.
- They promote efficient allocation of resources in the global economy
Cons:
- MNCs may be viewed as instruments of ‘capitalist domination’
* MNCs control critical sectors of their hosts’ economies.
* They make decisions about the use of resources, with little regard for host country needs.
* They weaken labour and environmental standards

126
Q

What is the consensus behind MNCs in terms of what they drive?

Week 7 seminar

A
  • They are the primary drivers and beneficiaries of globalisation
127
Q

Characteristics of an MNC…

Week 7 seminar

A
  • High asset turnover
  • Network of branches
  • Control + Continued growth
  • Sophisticated technology + Highly skilled
  • Aggressive marketing and advertising
128
Q

Pros of MNCs…

Week 7 seminar

A

Enhanced investment in host country.
* Tax revenue for home country.
* R&D becomes a potentially profitable venture.
* Large international companies create a lot of jobs for the global economy.
* Companies can provide consumers with better consistency when they exist internationally.

(R&D is Research and Development)

129
Q

Cons of MNCs…

Week 7 seminar

A
  • Preferential treatment over local industry.
  • Loss of jobs at home.
  • The presence of MNCs creates monopoly-building opportunities.
  • Environmental concerns can develop with the presence of MNCs
130
Q

Host Country Complaints about MNCs…

Week 7 seminar

A
  • Extraction of excessive profits.
  • Domination of the economy.
  • Interference with the government at many levels.
  • Failure to assist domestic firms in their development.
  • Hiring the best local personnel leaving domestic firms disadvantaged.
  • Failure to transfer advanced technologies.
131
Q

MNC Complaints about the Host Country…

Week 7 seminar

A
  • Limitations placed on profit making.
  • Resources are often overpriced.
  • Rules are exploited by the host government and companies.
  • Restrictions are applied to foreign exchange.
  • Failure to meet contract obligations.
132
Q

Rapid Growth of MNCs:
Microeconomic & Political Explanations…

(Firm-Specific Motivations)

Week 7 seminar

A
  • Vertical integration: stable supply chains + Horizontal integration: economies of scale
  • Technological change: improved ability to control operations in other nations.
  • Exporting/Importing.
  • Licensing: gives local firms right to manufacture their products in exchange for a
    fee.
  • Franchising: the firm provides sales or service strategies -> in exchange for fees
133
Q

Rapid Growth of MNCs:
Microeconomic & Political Explanations

(Environmental or Structural Motivations)

Week 7 seminar

A
  • Global economic growth + Liberalised financial markets
  • Security of investment +Liberal trade barriers
  • Maximise shareholder and stakeholder wealth
134
Q

Reasons why MNCs undertake FDI…

Week 7 seminar

A
  • To seek access to new markets;
  • To grow beyond a small domestic market
  • To achieve cost and other competitive advantages over competitors

(Foreign Direct Investment (FDI) is an international capital
flow undertaken by an MNC)

135
Q

Two types of FDI…

Week 7 seminar

A

Greenfield - a brand new facility is established in the host country.
Brownfield – an existing facility in the host country. Also known as a Merger and Acquisition (M&A).

136
Q

Pros and cons of FDI…

Week 7 seminar

A

Pros:
- Provides finance + tech to developing nations
- Promotes stable long-term lending + Diversifies investors’ problems
Cons:
- Unethical access to local markets
- Not suitable for strategically important industries
- Investors may have less moral attachment

137
Q

Pros of a Country’s Economic Openness…

Week 7 seminar

A

Advantages:
* Savings are put to more
productive uses.
* Risk sharing is beyond what
is possible domestically.
* Domestic recessions can be
minimised by borrowing.
* Costs of capital are lowered.

138
Q

Cons of a Country’s Economic Openness…

Week 7 seminar

A
  • Sometimes capital is not used
    wisely.
  • Foreign capital may leave
    quickly and cause financial
    volatility in the process.
  • Difficulty in taxing profits
  • MNCs shift to avoid.
  • Capital control effectiveness
    decreases

Lecture/seminar/reading content notes (10 decks)

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