Global Scope of the Firm Flashcards
1
Q
What are the dimensions of scope?
A
- Size & Scale
- Horizontal Scope
- Vertical Scope
- Geographic Scope
2
Q
When is a firm global?
A
- Generally, when it has international scope in terms of:
- Sales
- Raw material supplies
- People
- Capital
3
Q
Why do firms go global?
A
- More and more FDI-favourable policy changes
- Rising income levels in previously restricted markets
- Strategic response
- Saturated home markets
- Economies of Scale
- Knowledge/capability seeking (ASSET SEEKING)
- Mimicry
has the world changed in ways that make it easier for companies to become global?
4
Q
How can FDI restrictiveness be measured?
A
- OECD FDI Index gauges this by looking at:
- Foreign equity limitations
- Screening or approval mechanisms
- Restrictions on the employment of foreigners as key personnel
- Operational restrictions
5
Q
What is strategic response?
A
(e.g. Caterpillar entering China as retaliation for Sany entering USA)
6
Q
What is knowledge/capability seeking?
A
- (e.g. Google’s acquisitions)
- Asset-seeking behaviour, rather than asset-exploiting***
7
Q
What is the proper question and answer to is there a backlash against globalisation?
A
- “The World is Flat” - Friedman: Much easier to be globalised in this context; we are vey globalised
- Contrarian View
8
Q
What is Tom Friedman’s view?
A
- 3 Globalisations:
- Globalisation 1.0 of Countries (1400s - 1800s)
- Globalisation 2.0 of Companies (1800s - 2000)
- Globalisation 3.0 of People (2000 - now)
9
Q
What is the contrarian view of globalisation?
A
- Rugman & Verbeke (2004)
- Studies the multinational firms among the F500
- Looked at their sales penetration in NA, Europe, Asia
- Classified MNCs into:
- Home revision oriented (at least 50% sales in home region)
- Bi Regional (at least 20% sales in two regions)
- Host Region-oriented (at least 50% sales in non-home regions)
- Global (> 20% in all three regions of the world)
- Arbitrary?
- Result: 1.8% of F500 companies meet ‘global’ definition: most are home oriented
- Socially, etc, not globalised at all.
10
Q
Why do firms expand in general?
A
Resource-exploiting OR resource-seeking
