Internationalisation of services Flashcards
example of services
construction, education, insurance, health, financial
what do services account for
high proportions of stock, flow and share of outward and inward FDI in world economy
what are some features of the internationalisation of services
development of international financial system,
consumption and production at point of demand,
multinational service corporation
professional services d
services which provide an intermediary role in the production process
who do professional service TNCs supply services to
other professional services
what is an organisational form of professional services
TNC office networks
expatriate d
person who lives outside their native country
advantages of expatriates (parent country nationals PNCs)
direct control over subsidiary,
help to transfer and establish organisational culture,
provides career ladder for high performing HQ employees
disadvantages of expatriates (parent country nationals PNCs)
expensive,
failure,
problems with local assimilation (cultural adaptation),
personal issues (dual-career households, family),
immigration/work permit issues
advantages of employing locals (host country nationals HCNs)
knowledge of local culture legislation and markets,
career paths,
cheaper than primary country nationals (PCN),
continuity,
good relationship with local government and employees
disadvantages of employing locals (host country nationals HCNs)
more difficult to exercise control,
reduced career opportunities for primary country nationals (PCNs),
possible lack of familiarity or network with HQ personnel
advantages of employing third country nationals (TCNs)
neutral alternative to PCN for local staffing,
cheaper than PCN,
reduce language barriers,
expand recruitment pool,
may be more willing to accept international assignment than PCN
disadvantages of employing third country nationals (TCNs)
MNCs take short-term view of subsidiary operation,
immigration/work permit issues,
cultural differences,
repatriation issues,
selected on language rather than technical abilities
why expatriate
fill vacancies in foreign locations that cannot be taken by local qualified staff,
part of global management development programme to enhance junior and middle ranking managers,
develop global organisation of firm in terms of corporate strategy, sharing of best practice, learning and knowledge
main reasons for expatriation
career development, local expertise not available, creating international cadre of managers, transfer of expertise, control of local operations
what is the stat about expatriate failure in developing country assignments
15-50% failure in developing country assignments
what is the failure rate of US MNCs for expatriates
30-40%
what is the failure rate of expatriates for European MNCs
up to 10%
why is European expatriate failure so low
more exposure to different cultures and languages,
closer attention paid to selection and training,
high calibre of managers on assignment,
managers more international in orientation and outlook (than US counterparts)
what are some modes of international assignments
short term assignments (up to year), traditional expatriation (1-4 years or more), rotational assignments (regular commutes abroad)
what has happened recently to do with expatriation
there has been a shift from traditional expatriation to alternative expatriation of more short term and business travel
what is the rough ratio between international financial flows and the value of international trade in manufactured goods
international financial flows and foreign currency transactions totally dwarf the value of international trade in manufactured goods
what has deregulation of financial markets facilitated the opening of
the opening of new geographical markets, the provision of new financial products, and changes in how prices of financial services are set
how has the internationalisation of financial markets changed demand for financial services
demand for financial services is no longer restricted to the domestic context; financial markets have become increasingly global
what is absolutely central to all advanced business services (ABS)
information and communications technology (ICT)
what can global integration and instantaneous financial trading also create
costs, such as shocks that occur in one geographical market now spread instantaneously around the globe, creating the potential for global financial instability
what are derivatives
derivatives are financial tools derived from other financial products, such as equities and currencies, the most common are futures, swaps and options
how did regulation change over time
in the past six decades went from tight to looser regulation to deregulation - that is, until the 2008 financial crisis and reregulation returned to the agenda
where did pressures for deregulation come from
increasing abilities of transnational financial firms to take advantage of ‘gaps’ in the regulatory system and to operate outside national regulatory boundaries
why did governments rescue banks after the 2008 financial crisis
simply because credit is so absolutely essential for an economy to operate
what did deregulation lead banks to do
it became increasingly possible for banks to act as securities houses, for securities houses to act as banks, and for both to offer a bewildering array of financial services way beyond their original operations
did banks just have locations in their host country
no, they followed their major clients overseas
why do law firms require a high level of direct contact with their clients (and thus lots of offices everywhere etc)
legal regulations differ from country to country (lawyer qualified in one country may not be able to operate in another country),
the nature of the information being transmitted and the high level of trust involved necessitate a high level of face-to-face interaction
has ict developments and deregulation released advanced business services (ABS) from geographical constraints
no, this has resulted in cities becoming the natural habitat for advanced business services, so are just highly concentrated in cities
examples of advanced business services (ABS)
financial, legal, accounting, consultancy, headhunting, advertising
why are lots of advanced business services (ABS) concentrated in cities *
diversity of markets in international centres (large size and flexible in terms of entry and exit),
the culture of international cities (send/receive large amounts of information),
dynamic external economies of scale which arise of sheer size and concentration of ABS in same area (ex, attraction of linked services like legal etc, enhanced reputation which increases reputation and attracts new firms)
why is London significant as a global financial sector
historical evolution of the city as world centre has created a large pool of relevant skills and a high concentration of linked institutions in a very small geographical area,
geographical position located in time zone between Asia and New York,
regulatory environment encouraged growth of transnational banking,
London market brings together in one place great diversity of market participants
what has happened due to dispersed computer networks
decentralising higher-skilled functions away from head office into dispersed locations to avoid high costs (both land and labour)
who plans to move jobs out of central locations
Bank of America,
JP Morgan,
Deutsche Bank,
recently announced plans to move around 3000 jobs out of the City of London to other UK centres
what have ABS firms become increasingly involved in
offshoring some of their functions,
such as IT, lower value-added activities (payroll) and lower value-added contact with customers (such as scripted outbound sales calls)
what is the company in india called and what do they do *
Tata consultancy services (TCS),
one of the leading Indian IT-outsourcing companies
what has Tata consultancy services (TCS) done *
established its own operations in Hungary, as part of its increasingly global network
why did Tata consultancy services (TCS) choose Hungary *
cheap eastern european,
closer to customers,
Hungarians can often speak english as well as other european languages
