midterm appunti Flashcards
What is a MNC?
An enterprise with entities in different contries, entities are linked trough ownership ir ti share knwoledge
What is a subsiadiary?
„A subsidiary is defined as any operational unit controlled by the MNC and situated outside the home
country“
FDI definition?
. FDI is a measurement used for a company’s activities.
FDI are investments made by companies in order to make some value-creating activity in another country.
Main FDI stats?
Stock, flow, inflow, outflow
why added value is used instead of turnover?
We consider added value (the increased utility
of a product as it passes through different production stages) instead of turnover (fatturato) because the added
value gives me the true measurement of the activity of the company
What are the main issues with MNC behaviour?
Tax distortion, labor issues, enviromental disasters and predatory pricing
What are the main foreign market entry modes?
Greenfield, M&A, import and export, franchising, minority holdings, wholly owned subsidiaries or NON equity modes which are contractual relationships between TNCs and partner firms
What about control on different foreign market enter modes?
Usually the more you put equity in an investment the more you are able to have direct control on that investment, i due estremi: Import/export(no control) FDI(direct control)
What is international licensing?
International licensing is a contractual relationship in which an international firm (licensor) grants to a host
country firm (licensee) the right to use an intellectual property
What are the various forms of international licensing?
Brand licensing, product licensing and process licensing
What are strategic alliances?m
They are every hard to define, it is when 2 or more companies decide to involve cooperation, coordination and
information sharing for a joint project by the participating firms. hey are by definition non-equity, but
they cannot be classified as fully equity. They could be collocated between IPS and licensing
What is franchising?
Contractual relationship in
which an international firm (franchisor)
permits a host country firm (franchisee) to
run a business modelled on the system
developed by the franchisor in exchange
for a fee or a mark-up on goods or services
supplied by the franchisor
When joint ventures seem a good solutions?
When 2 or more parties hold complementary assets, negotiation is hard, When replication and acquisition are more expensive. If the assets are similar, we talk about scale joint ventures, if the assets are dissimilar, we define the JV a link
joint venture.
What are hierarchy and market risks?
Hierarchy: Shirking: employees are paid regardless of the profit generated by the store
- Less incentives to maximise profit
Market risks:
- Low shirking risk but high risk of opportunistic behaviour generating free riding — they do not care about the
performance of our product.
What are the main factors you should consider when choosing an entry mode?
Capital, contreol, flexibility, shirking risk, free riding risk
What are transaction costs?
Transaction costs, broadly defined, are all those costs
that arise in terms of time and expenditures for searching a business partner negotiating and forcing a contract.
What happens when transaction costs are higher than production costs?
Internazionalization
Why we do have transaction costs?
Contracts are not, by definition, complete
Second reason for which contracts are an imperfect instrument is that sometimes our partner behaves opportunistically
